When it comes to the question of the U.S. defaulting on its debt, it seems that the old adage ‘when the U.S. coughs, the world catches cold’ isn’t completely outdated. According to this editorial from Brazil’s O Globo, the fortunes of billions may depend of the vicissitudes of America’s cartoonish yet deadly serious political debate.
On the calendar of the global crisis – the most severe since the 1930s, September of 2008 is a kind of ground zero. That was the month that Lehman Brothers went insolvent, the Bush Administration wouldn’t rescue it from collapse, and a shocking freeze of credit-shock spread across the planet at computerized speed.
Another candidate to enter onto such a calendar would be August 2nd, for a reason that just a few years ago would have been regarded as pure fiction: on that day, the United States, for the first time in history, will default on its creditors – that is, if Republicans and Democrats don’t come to an understanding on raising the U.S. debt ceiling, which today stands at $14.2 trillion and which will be exhausted in early August.
It’s hard to imagine that due to a tug of war between the Democratic and Republic parties, an American default could occur, with all of the serious consequences this would entail for the country and the global economy, which, with Europe’s sovereign debt crisis, is already obliged to live on a knife’s edge.
This tax rebate for the rich expires on January 2013, and Obama’s plans don’t call for another extension. Moreover, Republicans want deep cuts in public health and social spending, which are considered untouchable by Democrats. Among Republicans, the Tea Party is exerting tremendous pressure. So the stability of the global economy depends on the mood of American voters.
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