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

Anti-Terror Drills Highlight China’s Push Into Central Asia

China, Russia, several central Asian countries wrap up massive anti terrorism military drills in Inner Mongolia More

Erdogan’s First Step: Secure More Power in New Role in Turkey

Erdogan was sworn in as Turkey's first popularly elected president on Thursday; he picked former foreign minister Ahmet Davutoglu as PM More

Pakistan Army Fails to Break Political Deadlock

PM Sharif claims he didn't ask army to defuse crisis; military rejects claim More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine Battles Pro-Russia Rebel Assaulti
X
Daniel Schearf
August 29, 2014 9:30 PM
After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Ukraine Battles Pro-Russia Rebel Assault

After NATO concluded an emergency meeting to discuss the crisis in eastern Ukraine, the country is struggling to contain heavy fighting near the strategic port of Mariupol, on the Azov Sea. Separatist rebels are trying to capture the city, allegedly with Russian military help, and Ukraine's defense forces are digging in. VOA's Daniel Schearf spoke with analysts about what lies ahead for Ukraine.
Video

Video Growing Business Offers Paint with a Twist of Wine

Two New Orleans area women started a small business seven years ago with one thing in mind: to help their neighbors relieve the stress of coping with a hurricane's aftermath. Today their business, which pairs painting and a little bit of wine, has become one of the fastest growing franchises across the U.S. VOA’s June Soh met the entrepreneurs at their newest franchise location in the Washington suburbs.
Video

Video Ebola Vaccine Trials To Begin Next Week

The National Institutes of Health says it is launching early stage trials of a vaccine to prevent the Ebola virus, which has infected or killed thousands of people across West Africa. The World Health Organization says Ebola could infect more than 20,000 people across the region by the time the outbreak is over. The epidemic has health experts and governments scrambling to prevent more people from becoming infected. Zlatica Hoke has more.
Video

Video Asian Bacteria Threatens Florida Orange Trees

Florida's citrus fruit industry is facing a serious threat from a bacteria carried by the Asian insect called psyllid. The widespread infestation again highlights the danger of transferring non-native species to American soil. VOA’s George Putic reports.
Video

Video Aging Will Reduce Economic Growth Worldwide in Coming Decades

The world is getting older, fast. And as more people retire each year, fewer working-age people will be there to replace them. Bond rating agency Moody’s says that will lead to a decline in household savings; reducing global investments - which in turn, will lead to slower economic growth around the world. But experts say it’s not too late to mitigate the economic impact of the world’s aging populations. Mil Arcega has more.
Video

Video Is West Doing Enough to Tackle Islamic State?

U.S. President Barack Obama has ruled out sending ground troops to Iraq to fight militants of the so-called Islamic State, or ISIS, despite officials in Washington describing the extremist group as the biggest threat the United States has faced in years. Henry Ridgwell reports from London on the growing uncertainty over whether the West’s response to ISIS will be enough to defeat the terrorist threat.
Video

Video Coalition to Fight Islamic State Could Reward Assad

The United States along with European and Mideast allies are considering a broader assault against Islamic State fighters who have spread from Syria into Iraq and risk further destabilizing an already troubled region. But as VOA State Department Correspondent Scott Stearns reports, confronting those militants could end up helping the embattled Syrian President Bashar al-Assad.
Video

Video Made in America Socks Get Toehold in Online Fashion Market

Three young entrepreneurs are hoping to revolutionize the high-end sock industry by introducing all-American creations of their own. And they’re doing most of it the old-fashioned way. VOA’s Julie Taboh recently caught up with them to learn what goes into making their one-of-a-kind socks.
Video

Video Americans, Ex-Pats Send Relief Supplies to West Africa

Health organizations from around the world are sending supplies and specialists to the West African countries that are dealing with the worst Ebola outbreak in history. On a smaller scale, ordinary Americans and African expatriates living in the United States are doing the same. VOA's Carol Pearson reports.
Video

Video America's Most Popular Artworks Displayed in Public Places

Public places in cities across America were turned into open-air art galleries in August. Pictures of the nation’s most popular artworks were displayed on billboards, bus shelters, subway platforms and more. The idea behind “Art Everywhere,” a collaborative campaign by five major museums is to allow more people to enjoy art and learn about the country’s culture and history. Faiza Elmasry has more.
Video

Video Chinese Doctors Use 3-D Spinal Implant

A Chinese boy suffering from a debilitating bone disease has become the first patient with a part of his spine created in a three-dimensional printer. Doctors say he will soon regain normal mobility. VOA’s George Putic reports.
Video

Video India’s Leprosy Battle Stymied by Continuing Stigma

Medical advancements in the treatment of leprosy have greatly diminished its impact around the world, largely eliminating the disease from most countries. India made great strides in combating leprosy, but still accounts for a majority of the world’s new cases each year, and the number of newly infected Indians is rising - more than 130,000 recorded last year. Doctors there say the problem has more to do with society than science. Shaikh Azizur Rahman reports from Kolkata.

AppleAndroid