US Debt Ceiling: Republicans should put their nation first

Last Updated : 16 January 2013 at 13:50 IST

The Republicans are holding the sacrosanct US debt a hostage and is refusing to raise the debt ceiling so that they could extricate some spending cuts. Alas! they know-not what they are doing; and they are doing it for the second time: throwing the fragile global recovery to winds.

“Congress is not being asked to give permission for future borrowing, but for the authorization to borrow to fund programs that Congress itself has already approved.”--Port Land Press Herald, said in an opinion piece recently.

The quotation above sums it up well and good!

Judging by the way things are proceeding, the Republicans are hell bent on making the President come to them with a cap in hand and beg.

The quote simply neutralises Republican intentions in effect and brings out Republicans' egoistic political jingoism and despicable brinkmanship; they want to rattle the markets and see to it that the AAA rated US government default or precisely, create such an impression around and bring President Obama to the discussion table.

What they want in return is spending cuts.

Everybody would acknowledge that US spends more than it earns and lives on credit; this has to be brought under some sort of control. But mixing the same with raising of debt-ceiling is an ill advised cocktail; the consequences would be catastrophic. US cannot afford to default. Not even by a penny. “If it happens..?” would be a blasphemous question raised at the altar of capitalism.

The spending problem is more of a question of culture.

The boom times taught America to live beyond its means; now a crunch time is the best time to unlearn that. And it has to start from schools. Voluntary austerity is something they can learn from the East.

On a latest note, the Republicans have started to push for prioritizing payments. Pay the debt first and then only pay your soldier! How rediculous! Markets are no fool.

“Payment prioritization doesn't stop payments, it just delays them. Then the aggrieved party sues the government, and probably wins, and it turns into a bloody mess," Keith Hennessey, now an economist at Stanford, said in a blog post this week and was quoted by Reuters as saying.

Even a coterie of Republicans are against this idea of payment prioritization.

Arise, awake Republicans. If you have some patriotism left in you, put the nation before your ego and end this once and for all! 

As published here: http://www.commodityonline.com/news/us-debt-ceiling-republicans-should-put-their-nation-first-52254-3-52255.html

Recession, US default and the Capitol

The ensuing six months are very critical for the world economy as it moves through a tight rope with a short pole for balance and heavy winds lashing against it.

There are conflicting views regarding the state of global economy: many argue that the world is on a recovery path. Others would say that the crisis is far from over and the current growth is just a dream before a nightmare.

The truth is that it is still possible for the world to make the outcome the way it wishes: dream or nightmare.

It would be a beautiful dream provided a concerted effort is on from the part of world leaders putting to rest the petty political diatribes and narrow alley-mentality. It would be a nightmare if the opposite works out.

Take it from me: if the world goes to recession once again, it would not be purely for the (complex) economic reasons, but for the (petty) political ones as well.

Take the case of debt-ceiling debate in US

Nobody loves a bad debt. Not even US.

Debt is more a question of trust than a question of performance. It is more of an impression, an assurance signed and extended into the future that would help the lender sleep in peace. Please note that this applies only to the planet’s biggest economy: the USA. If you are USA, you can pay your debt. If you are not USA, then better be China or India; you may have some reprieve.

Go down the ranks and chances are less that you would survive on debt; debt alone.

Now what if the USA defaults?

That is unthinkable....

Sorry, a storm is gathering. If the planet’s dignified-glorified democracy goes nuts in its Capitol, a recession can happen. If it does not...Obama warning about a recession could have a Nostradamus effect. It can become true.

This is the moment: If the Republicans behave with some magnanimity and would raise the debt ceiling, a major global catastrophe can be averted. In return the world expects the wizard of the white house to tighten his belt and for that matter the belt of obese consumerist credit driven consumption maniacs in US, and help them start saving.

Meanwhile Bernanke can start raising the interest rates. He should also tell us what it would be like after the expiry of QE2. The world does not want a QE3; but it doesn’t want the commodity market, or for that matter, the equity markets to come down.

Aside: The world does not want the interest rates in the growth markets to rise as well.

As published in: http://www.commodityonline.com/news/Recession-US-default-and-the-Capitol-39067-3-1.html