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

Turkey: No Ransom Paid for Release of Hostages Held by IS Militants

President Erdogan hails release of hostages as diplomatic success but declines to be drawn on whether their release freed Ankara's hand to take more active stance against insurgents More

Audio Sierra Leone Ends Ebola Lockdown

Health ministry says it has reached 75 percent of its target of visiting 1.5 million homes to locate infected, educate population about virus More

US Pivot to Asia Demands Delicate Balancing Act

As tumult in Middle East distracts Obama administration, efforts to shift American focus eastward appear threatened More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Natural Gas Export Plan Divides Maryland Towni
X
Deborah Block
September 21, 2014 2:12 PM
A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Natural Gas Export Plan Divides Maryland Town

A U.S. power company that has been importing natural gas now wants to export it. If approved, its plant in Lusby, Maryland, would likely be the first terminal on the United States East Coast to export liquefied natural gas from American pipelines. While some residents welcome the move because it will create jobs, others oppose it, saying the expansion could be a safety and environmental hazard. VOA’s Deborah Block examines the controversy.
Video

Video Difficult Tactical Battle Ahead Against IS Militants in Syria

The U.S. president has ordered the military to intensify its fight against the Islamic State, including in Syria. But how does the military conduct air strikes in a country that is not a U.S. ally? VOA correspondent Carla Babb reports from the Pentagon.
Video

Video Iran, World Powers Seek Progress in Nuclear Talks

Iran and the five permanent members of the U.N. Security Council plus Germany, known as the P5 + 1, have started a new round of talks on Iran's nuclear program. VOA State Department correspondent Pam Dockins reports that as the negotiations take place in New York, a U.S. envoy is questioning Iran's commitment to peaceful nuclear activity.
Video

Video Alibaba Shares Soar in First Day of Trading

China's biggest online retailer hit the market Friday -- with its share price soaring on the New York Stock Exchange. The shares were priced at $68, but trading stalled at the opening, as sellers held onto their shares, waiting for buyers to bid up the price. More on the world's biggest initial public offering from VOA’s Bernard Shusman in New York.
Video

Video Obama Goes to UN With Islamic State, Ebola on Agenda

President Obama goes to the United Nations General Assembly to rally nations to support a coalition against Islamic State militants in Iraq and Syria. He also will look for nations to back his plan to fight the Ebola virus in West Africa. As VOA White House correspondent Luis Ramirez reports, Obama’s efforts reflect new moves by the U.S. administration to take a leading role in addressing world crises.
Video

Video Migrants Caught in No-Man's Land Called Calais

The deaths of hundreds of migrants in the Mediterranean this week has only recast the spotlight on the perils of reaching Europe. And for those forunate enough to reach a place like Calais, France, only find that their problems aren't over. Lisa Bryant has the story.
Video

Video Westgate Siege Anniversary Brings Back Painful Memories

One year after it happened, the survivors of the terror attack on Nairobi's Westgate Shopping Mall still cannot shake the images of that tragic incident. For VOA, Mohammed Yusuf tells the story of victims still waiting for the answer to the question 'how could this happen?'
Video

Video Militant Assault in Syria Displaces Thousands of Kurds

A major assault by Islamic State militants on Kurds in Syria has sent a wave of new refugees to the Turkish border, where they were stopped by Turkish border security. Turkey is already hosting about 700,000 Syrian refugees who fled the civil war between the government and the opposition. But the government in Ankara has a history of strained relations with Turkey's Kurdish minority. Zlatica Hoke reports Turkey is asking for international help.
Video

Video Whaling Summit Votes to Uphold Ban on Japan Whale Hunt

The International Whaling Commission, meeting in Slovenia, has voted to uphold a court ruling banning Japan from hunting whales in the Antarctic Ocean. Conservationists hailed the ruling as a victory, but Tokyo says it will submit revised plans for a whale hunt in 2015. Henry Ridgwell reports from London.
Video

Video A Dinosaur Fit for Land and Water

Residents and tourists in Washington D.C. can now examine a life-size replica of an unusual dinosaur that lived almost a hundred million years ago in northern Africa. Scientists say studying the behemoth named Spinosaurus helps them better understand how some prehistoric animals adapted to life on land and in water. The Spinosaurus replica is on display at the National Geographic museum. VOA’s George Putic has more.
Video

Video Iraqi Kurdistan Church Helps Christian Children Cope find shelter in churches in the Kurdish capital, Irbil

In the past six weeks, tens of thousands of Iraqi Christians have been forced to flee their homes by Islamic State militants and find shelter in churches in the Kurdish capital, Irbil. Despite U.S. airstrikes in the region, the prospect of people returning home is still very low and concerns are starting to grow over the impact this is having on the displaced youth. Sebastian Meyer reports from Irbil on how one church is coping.


Carnage and mayhem are part of daily life in northern Nigeria, the result of a terror campaign by the Islamist group Boko Haram. Fears are growing that Nigeria’s government may not know how to counter it, and may be making things worse. More

AppleAndroid