Last Updated : 03 January 2013 at 11:50 IST
Will US default on its debt?
Of course, we cannot say this at this point in time; but if it happens it can usher in a solvency crisis and the resulting issues would add to global uncertainty and risk escalation forcing gold and silver to evergreen highs. This much we know as debt-ceiling debate puts on its trousers before heading to the Capitol.
Obama has said that he considers it not-debatable if the debt-ceiling should be raised or not. Analysis say the issue could well become the next fiscal cliff: a source of contiguous consternation.
“I will not have another debate with this Congress over whether or not they should pay the bills that they’ve already racked up through the laws that they passed,” the president said Tuesday night after the fiscal cliff deal was clinched.
The US government has to pay the bills and it is the collective responsibility of the Congress and government (not government's alone) to see to it that money to this effect is raised.
The problem lies here: Republicans see debt through the glass of spending cuts: no spending cuts, no raising of debt-ceiling. Democrats, even as they may acknowledge debt as a problem is not so much into spending cuts as much as Republicans. They too see heaping debt as a problem but they view it much more as a part of the solution. Spend yourself out of the financial crisis rather than going in for strictest austerity measures; at least that is the impression one gets.
This statement of the President quoted above is loosely worded. He may not have debates and may favour “little less drama” for the next time. But being the President of US is at once a handicap. He will have to discuss, if not debate, especially as US has already hit the borrowing limit Monday.
“We’re in for another round of brinkmanship and uncertainty,” said Mark Zandi, the chief economist at Moody’s Analytics to New York Times. “I don’t think the economy can really find its footing and jump to a higher level of growth until we get to the other side of this.”
The President’s Medicare and Social Security schemes may become the eye of the storm as Republicans see that enough meat could be cut off from both. Meanwhile, the President himself may consider banking on the help from influential business-men in garnering support for his current 'non-negotiable stand'.
After all, Republicans and the rich are of the same feathers.
“You don’t put the full faith and credit of the United States’ finances at risk,” said David M. Cote, chairman of Honeywell and a Republican member of the 2010 Simpson-Bowles fiscal commission to New York Times.
“The whole idea of using debt ceiling that way or saying ‘I’ll do this horrible thing to all of us unless you give in’ just doesn’t make any sense for anybody. It makes me very nervous. It’s not a smart way to run the country.” he added.
While the markets brace for another few months of volatility possibly into March, gold and silver prices are expected to be on tenterhooks. While they oscillate between gains and losses, bull fights and bear hugs, investors would face another crisis of confidence.
But, if history is any indication, then chances are more that the issue would get addressed and will have a little more drama and close-to-the-flesh nail-biting-finish!
Gold and silver would become the ultimate casualities, hostages and what-not...
Gold and silver would become the ultimate casualities, hostages and what-not...
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