Monday, July 28, 2014





WORLD OPINION: DEBT DANGERS DOWN UNDER US mess offers warning


October 21. 2013 12:00AM
Story Tools
PrintPrint | E-MailEMail | SaveSave | Hear Generate QR Code QR
Send to Kindle


The recent high-stakes bickering in Washington between Democrats and Republicans to resolve the government shutdown and to avoid a disastrous debt default has invited international contumely and contempt for America’s political system; disorder ruled in the US capital as the world’s financial system seemingly was brought to the brink of a catastrophe that might have rivaled 2008’s global financial crisis.


Not only was there acrimony between President Barack Obama and the Republican-controlled House of Representatives, a split within the Grand Old Party itself seemingly derailed the prospects of a long-term solution, even as a temporary way through the immediate impasse on lifting the $17.5 trillion debt ceiling emerged.


Certainly investors have reassessed their holdings of U.S. securities. If the U.S. government were ever to miss a payment, the whole ball game changes. As some analysts already fear, the judgment will be that U.S. Treasury securities — the fundamental tools in global markets — are no longer as good as cold, hard cash.


The lengthy standoff in Washington also undermined the credibility of the greenback as a reliable global reserve currency, which is already under a cloud thanks to repeated rounds of money printing.


These are trying times in the global economy; investor confidence may deteriorate because standard rules of thumb can no longer be relied upon.


The lesson for a medium-sized, open trading nation such as Australia is clear. Debt does matter, as does economic credibility in a febrile market climate. Fiscal repair is a first-order issue for Tony Abbott’s government.


The Australian


Sydney, Australia




Comments
comments powered by Disqus Commenting Guidelines
Poll
Mortgage Minute


Search for New & Used Cars

Make 
Model
 
Used New All
 

Search Times Leader Classifieds to find just the home you want!

Search Times Leader Classifieds to find just what you need!

Search Pet Classifieds
Dogs Cats Other Animals



Social Media/RSS
Times Leader on Twitter
Times Leader on Youtube
Times Leader on Google+
The Times Leader on Tumblr
The Times Leader on Pinterest
Times Leader RSS Feeds