News / USA

Analyst: World Watches US Crisis With Bewilderment

Analyst: World Watches US Crisis With Bewildermenti
X
October 08, 2013 12:31 PM
As the U.S. government budget crisis enters a second week, there are concerns that the rivalry between Democrats and Republicans in Congress may bring the United States to default, which would cause domestic and global economic woes. Zlatica Hoke reports that the world is observing developments in the U.S. capital with bewilderment, as well as concern.
Zlatica Hoke
As the U.S. government budget crisis enters a second week, there are concerns that the rivalry between Democrats and Republicans in Congress may bring the United States to default, which would cause domestic and global economic woes. The world is observing developments in the U.S. capital with bewilderment, as well as concern.

Republicans may allow default

The top Republican leader in the U.S. House of Representatives has signaled that he may allow the United States to default for the first time in history if President Barack Obama refuses a compromise on federal spending.  The United States must increase its debt ceiling by October 17 to be able to pay for government debt already accrued.

The president, a Democrat, said he is open to negotiation with the Republicans on any issue, but not amid such threats. "We're not going to negotiate under the threat of further harm to our economy and middle class families. We're not going to negotiate under the threat of a prolonged shutdown until Republicans get 100 percent of what they want," Obama said. "We're not going to negotiate under the threat of economic catastrophe that economists and CEOs increasingly warn would result if Congress chose to default on America's obligations.

Devastating consequences

One analyst warned that a prolonged shutdown could have harmful effects on the U.S. economy.  But he said the U.S. defaulting on its debt would be worse.

Klaus Larres, a professor of international relations at the University of North Carolina, said the consequences would be disastrous for the world still recovering from a major financial crisis. "I think the Great Recession would be back with a vengeance, and we would be back in severe economic and financial difficulties.  So I can only warn that the debt ceiling problem should not be mixed up with the shutdown of the government," he stated.

Larres said a default on the U.S. debt would have immediate consequences that would reverberate around the world.  For example, it could undermine the U.S. dollar's position as the global reserve currency and even the U.S. role as the world's strongest economy.

"It has never happened before that such a big country as the United States, a leading superpower of the day, is defaulting on its debts for technical reasons - because the United States is still a very rich and wealthy country; the money is there," noted Larres.

International effects

But other economies also could be affected.  China is concerned about more than $1 trillion it has invested in the United States and is urging the United States to raise its debt ceiling.  

Larres said much of the world has difficulty understanding this U.S. crisis, especially countries with authoritarian governments, such as China and some other East Asian states.

"What is the debt ceiling, why does the government need to raise the debt ceiling?  These are all questions people are wondering about because apart from the United States and Denmark, a debt ceiling doesn’t need to be raised by any other country in the world, so obviously, no one really understands that," he said.

Larres said the effects of the U.S. government shutdown are still mild, and that with a timely solution, the situation could be quickly rectified.  But he added a prolonged impasse and a deeper crisis could have a negative effect that could undermine the position of the United States as the world's top political and economic leader.

You May Like

Diplomats Work to Extend Arab-Israeli Cease-Fire

Top officials from the US, France, Britain, Germany, Italy, Turkey and Qatar gather in Paris, while Israel security forces continue searching for tunnels used by militants and Gazan rescue workers search for bodies More

Photogallery US Defense Department Warns of Arms to Eastern Ukraine

‘Imminent’ delivery of Russian rocket launcher poses threat to civilians, US says More

Video Researchers: Africa Genetically Modified Crops Held Back by Scaremongering

GM crops offer best hope of increasing productivity and coping with climate change in Africa, according to co-author of Chatham House report More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Astronauts Train in Underwater Labi
X
George Putic
July 25, 2014 7:25 PM
In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Astronauts Train in Underwater Lab

In the world’s only underwater laboratory, four U.S. astronauts train for a planned visit to an asteroid. The lab - called Aquarius- is located five kilometers off Key Largo, in southern Florida. Living in close quarters and making excursions only into the surrounding ocean, they try to simulate the daily routine of a crew that will someday travel to collect samples of a rock orbiting far away from earth. VOA’s George Putic has more.
Video

Video Not Even Monks Spared From Thailand’s Junta-Backed Morality Push

With Thailand’s military government firmly in control after May’s bloodless coup, authorities are carrying out plans they say are aimed at restoring discipline, morality and patriotism to all Thais. The measures include a crackdown on illegal gambling, education reforms to promote students’ moral development, and a new 24-hour phone hotline for citizens to report misbehaving monks. Steve Sandford reports from Bangkok.
Video

Video Virtual Program Teaches Farming Skills

In a fast-changing world beset by unpredictable climate conditions, farmers cannot afford to ignore new technology. Researchers in Australia are developing an online virtual world program to share information about climate change and more sustainable farming techniques for sugar cane growers. As VOA's Zlatica Hoke reports, the idea is to create a wider support network for farmers.
Video

Video Airline Expert: Missile will Show Signature on Debris

The debris field from Malaysia Airlines Flight 17 is spread over a 21-kilometer radius in eastern Ukraine. It is expected to take investigators months to sort through the airplane pieces to learn about the missile that brought down the jetliner and who fired it. VOAs Carolyn Presutti explains how this work will be done.
Video

Video Treatment for Childhood Epilepsy Heats up Medical Marijuana Debate

In the United States, marijuana is classed as an illegal drug by the federal government. But nearly half the states have legalized it, to some degree. Proponents say some strains of marijuana might have exceptional health benefits, for treating pain or inflammation in chronic conditions such as cancer, multiple sclerosis and epilepsy. Shelley Schlender reports on a strain of medical marijuana developed in Colorado that is reputed to reduce seizures in childhood epilepsy
Video

Video Airbus Adds Metal 3D Printed Parts to New Jets

By the end of this year, European aircraft manufacturing consortium Airbus plans to deliver the first of its new, extra-wide-body passenger jets, the A350-XWB. Among other technological innovations, the new plane will also incorporate metal parts made in a 3-D printer. VOA's George Putic has more.
Video

Video AIDS Conference Welcomes Exciting Developments in HIV Treatment, Prevention

Significant strides have been made in recent years toward the treatment and prevention of HIV, the virus that causes AIDS. This year, at the International AIDS Conference, the AIDS community welcomed progress on a new pill that may prevent transmission of the deadly virus. VOA’s Anita Powell reports from Melbourne, Australia.
Video

Video IAEA: Iran Turns its Enriched Uranium Into Less Harmful Form

Iran has converted its stockpiles of enriched uranium into a less dangerous form that is more difficult to use for nuclear weapons, according to the United Nations’ Atomic Energy Agency. The move complies with an interim deal reached with Western powers on Iran's nuclear program last year, in exchange for easing of sanctions. Henry Ridgwell reports for VOA from London.

AppleAndroid