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

Jihadist Assassin says Goal of Tunisia Murders Was Chaos

Abu Muqatil at-Tunusi’s remarks in a propaganda interview also cast light on attack on Bardo Museum More

Russia Denies License to Tatar-Language TV Station in Crimea

OSCE official says denial shows 'politically selective censorship of free and independent voices in Crimea is continuing' More

Kenyan Startups Tackle Expensive Remittances Through Bitcoin

Some think services could give Western Union a run for its money, though others say it’s still got a long way to go More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
For Obama, It's More Business Than Friendships With World Leadersi
X
Aru Pande
April 01, 2015 9:09 PM
The rift between President Barack Obama and Israeli Prime Minister Benjamin Netanyahu has put a spotlight on the importance of the American leader’s personal relationships with other world leaders and what role such friendships play in foreign policy. VOA's Aru Pande reports.
Video

Video For Obama, It's More Business Than Friendships With World Leaders

The rift between President Barack Obama and Israeli Prime Minister Benjamin Netanyahu has put a spotlight on the importance of the American leader’s personal relationships with other world leaders and what role such friendships play in foreign policy. VOA's Aru Pande reports.
Video

Video Buhari: Nigeria Has ‘Embraced Democracy’

Nigeria woke up to a new president-elect Wednesday, Muhammadu Buhari. But people say democracy is the real winner as the country embarks on its first peaceful handover of power since the end of military rule in 1999. VOA’s Anne Look reports from Abuja.
Video

Video Tiny Camera Sees Inside Blood Vessels

Ahead of any surgical procedure, doctors try to learn as much as possible about the state of the organs they plan to operate on. A new camera developed in the Netherlands can now make that easier - giving surgeons an incredibly detailed look inside blood vessels, all the way to the patient’s heart. VOA’s George Putic has more.
Video

Video Latin American Groups Seek Fans at Texas Music Festival

Latin American music groups played all over Austin, Texas, during the recent South by Southwest festival, and some made fans out of locals as well as people from around the world who had come to hear music. Such exposure can boost such groups' image back home. VOA’s Greg Flakus reports.
Video

Video Stockton Community, Police, Work to Improve Relations

Relations are tense between minority communities and police departments around the United States following police shootings that have generated widely-publicized protests. VOA's Mike O’Sullivan reports from Stockton, California, where police and community groups are working toward solutions, with backing from Washington.
Video

Video Indiana Controversy Highlights Divergent Meanings of Religious Freedom

Indiana’s state government has triggered a nationwide controversy by approving a law that critics say is aimed at allowing discrimination against gays and lesbians. The controversy stems from divergent notions of religious freedom in America. VOA's Jerome Socolovsky reports.
Video

Video Report: State of Black America a 'Tale of Two Nations'

The National Urban League has described this year's "State of Black America" report as a "tale of two nations." The group's annual report, released earlier this month (March), found that under an equality index African Americans had only 72% parity compared to whites in areas such as education, economics, health, social justice and civic engagement. It’s a gap that educators and students at Brooklyn’s Medgar Evers College are looking to close. VOA's Daniela Schrier reports from the school.
Video

Video Film Tells Story of Musicians in Mali Threatened by Jihadists

At this year's annual South by Southwest film and music festival in Austin, Texas, some musicians from Mali were on hand to promote a film about how their lives were upturned by jihadists who destroyed ancient treasures in the city of Timbuktu and prohibited anyone from playing music under threat of death. As VOA’s Greg Flakus reports from Austin, some are afraid to return to their hometowns even though the jihadists are no longer in control there.
Video

Video Ebola Vaccine Trials Underway in West Africa

Ebola has claimed the lives of more than 10,000 people in West Africa. Since last summer, researchers have rushed to get anti-Ebola vaccines into clinical trials. While it's too early to say that any of the potential vaccines work, some scientists say they are seeing strong results from some of the studies. VOA's Carol Pearson reports.
Video

Video Philippines Wants Tourists Spending Money at New Casinos

Tourism is a multi-billion dollar industry in the Philippines. Close to five million foreign visitors traveled there last year, perhaps lured by the country’s tropical beaches. But Jason Strother reports from Manila that the country hopes to entice more travelers to stay indoors and spend money inside new casinos.
Video

Video Civilian Casualties Push Men to Join Rebels in Ukraine

The continued fighting in eastern Ukraine and the shelling of civilian neighborhoods seem to be pushing more men to join the separatist fighters. Many of the new recruits are residents of Ukraine made bitter by new grievances, as well as old. VOA's Patrick Wells reports.
Video

Video Cambodian Land Grabs Threaten Traditional Communities

Indigenous communities in Cambodia's Ratanakiri province say the government’s economic land concession policy is taking away their land and traditional way of life, making many fear that their identity will soon be lost. Local authorities, though, have denied this is the case. VOA's Say Mony went to investigate and filed this report, narrated by Colin Lovett.

VOA Blogs

Circumventing Censorship

An Internet Primer for Healthy Web Habits

As surveillance and censoring technologies advance, so, too, do new tools for your computer or mobile device that help protect your privacy and break through Internet censorship.
More