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article imageDebt fiasco damaging U.S. reputation

By Robert Weller     Oct 13, 2013 in Politics
With the U.S. fast approaching a debt payment failure the nation’s reputation already is suffering around the world. Leaders say the world will not be the same.
The Washington Post reported progress Monday afternoon in talks in the Senate. President Obama, meanwhile, said there is a real risk of default.
Maverick New Jersey Republican Gov. Chris Christie told the Philadelphia Inquirer editorial board, "If I was in the Senate right now, I'd kill myself."
Within three minutes of opening Monday the stock market was down 100 points, but ended up for the fourth straight day. Brokers apparently believe the crisis will be solved.
The Post reported that Social Security payments due after Oct. 17 to millions of Americans may be at risk. Although the newspaper described them as a "safety net," suggesting they are entitlements, in fact many recipients paid much more into the accounts than they ever will receive back.
World financial leaders had come to Washington D.C. this week to discuss the world economic recovery but ended up discussing a possible economic collapse.
Christine Lagarde, International Monetary Fund director, said the dispute was risking “massive disruption the world over,” according to the New York Times.
The Chinese news agency Xinhua said using payment of international debts as a bargaining chip was “dangerously irresponsible,” the Guardian reported. If it works this time there would be fears it would become a common tool every time there is a government dispute.
The economics taught in schools says failure to pay even one interest payment on debt due Thursday will result in all bondholders wanting their money back immediately.
No progress was reported on the budget impasse as Senators took over negotiating a deal when House Speaker John Boehner broke off negotiations because President Obama wanted the government shutdown ended and a debt ceiling deal that would last at least until the end of the year.
The talks were likely to continue Monday, which was a Columbus Day holiday for many, but not the stock market.
The world’s concern has been building as Republicans have been unable to reach a firm deal to finance the full government for six months.
Last week Russian President Vladimir Putin said, “This is highly important for all of us. I am hopeful that all the political forces in the United States will be able to resolve this crisis as quickly as possible.”
The irony of the recovery meeting was not lost on Lagarde.
“(they came to Washington and) found out that the debt ceiling was the issue. They found out that the government had shut down and that was no remedy in sight.”
Xenia Dormandy, a senior fellow at the London-based think tank Chat House, said a failure to pay U.S. debts would make the world a different place. “What would the world look like if you had America no longer the reliable ally, the provider of global good.”
More about Debt ceiling, government shutdown, Boehner, Tea party, lagarde
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