News / USA

World Watches US Crisis with Bewilderment, Concern

World Watches US Crisis with Bewilderment, Concerni
X
October 08, 2013 4:39 AM
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.

World Watches US Crisis with Bewilderment, 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 force the United States to default on its obligations. This would cause serious problems for both the national and global economies. As the shutdown continues, the world is observing developments in the U.S. capital with bewilderment and concern.
 
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, has said that 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.  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,” said Obama.
 
Analysts are warning that a prolonged shutdown could have harmful effects on the U.S. economy, but that the U.S. defaulting on its debt would be even worse.
 
Klaus Larres, a professor of international relations at the University of North Carolina, claims the consequences would be disastrous for the world as it continues to recover from the 2008 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," said Larres.
 
Larres also said that 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," said Larres.
 
The U.S. economy is not the only one that would be affected by a default. 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 believes much of the world, especially countries with authoritarian governments, such as China, is having difficulty understanding this U.S. crisis.
 
"’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," explained Larres.
 
According to Larres, so far the effects of the U.S. government shutdown continue to be mild, and with a timely solution the situation could be quickly rectified.  However, he says, 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 political and economic leader.

You May Like

Is Air Travel Safe?

Aviation expert says despite tragic losses of Malaysian Airlines flights 370 and 17, industry experienced lowest fatality rate in recorded history last year More

Multimedia 100 Days Later, Nigerian Girls Still Held

Activists holding rallies in Nigeria and several other countries to mark 100th day of captivity for more than 200 schoolgirls being held by Boko Haram More

Chocolate Too Bitter? Swap Sugar for Mushrooms

US food technology company develops fermentation process using mushrooms to reduce bitterness in cocoa beans, believes it will cut sugar content in candy More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
US Carriers Suspend Travel to Israeli
X
Carolyn Presutti
July 23, 2014 1:21 AM
The United States is prohibiting American carriers from flying to Israel's airport in Tel Aviv for 24 hours, because of rising violence between Israel and Hamas militants. The action was announced on Tuesday, after a rocket fired by Hamas militants in the Gaza Strip landed near the airport. As VOA's Carolyn Presutti tells us, international officials soon may have to determine which combat zones are too dangerous for commercial flights.
Video

Video US Carriers Suspend Travel to Israel

The United States is prohibiting American carriers from flying to Israel's airport in Tel Aviv for 24 hours, because of rising violence between Israel and Hamas militants. The action was announced on Tuesday, after a rocket fired by Hamas militants in the Gaza Strip landed near the airport. As VOA's Carolyn Presutti tells us, international officials soon may have to determine which combat zones are too dangerous for commercial flights.
Video

Video NASA Focuses on Earth-Like Planets

For decades, looking for life elsewhere in the universe meant listening for signals that could be from distant civilizations. But recent breakthroughs in space technology refocused some of that effort toward finding planets that may harbor life, even in its primitive form. VOA’s George Putic reports on a recent panel discussion at NASA’s headquarters, in Washington.
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.
Video

Video Relic of Saint Draws Catholics Worried About Immigration Issue

A Roman Catholic saint who is a figure of devotion for those crossing the border into the United States is attracting believers concerned about the plight of undocumented immigrants. Mike O'Sullivan reports from Los Angeles, where a relic of Saint Toribio has drawn thousands to local churches.
Video

Video US Awards Medal of Honor for Heroics in Bloodiest of Afghan Battles

U.S. combat troops are withdrawing from Afghanistan, on pace to leave the country by the end of this year. But on Monday, U.S. President Barack Obama took time to honor a soldier whose actions while under fire in Afghanistan earned him the Medal of Honor. VOA's Jeff Seldin has more from the Pentagon.
Video

Video Ukraine Rebels Surrender MH17 Black Boxes

After days of negotiations, a senior separatist leader handed over two black boxes from an airliner downed over eastern Ukraine to Malaysian experts early Tuesday. While on Monday, the U.N. Security Council unanimously demanded that armed groups controlling the crash site allow safe and unrestricted access to the wreckage.
Video

Video In Cambodia, HIV Diagnosis Brings Deadly Shame

Although HIV/AIDS is now a treatable condition, a positive diagnosis is still a life altering experience. In Cambodia, people living with HIV are often disowned by friends, family and the community. This humiliation can be unbearable. We bring you one Cambodian woman’s struggle to overcome a life tragedy and her own HIV positive diagnosis.
Video

Video Nature of Space Exploration Enters New Age

Forty-five years ago this month, the first humans walked on the moon. It was during an era of the space race between the United States and the Soviet Union. World politics have changed since then and -- as Elizabeth Lee reports -- so has the nature of space exploration.

AppleAndroid