The World, the Maltreated Child of Republicans and Democrats
The debate on U.S. public debt is currently turning the American people into children who are watching their parents fight over which punishment they should receive. Republicans want to reduce health care and social security spending, while Democrats want higher taxes.
By the open window, all the countries of the world are fearfully watching the two parties fight, while the pressure (of approximately $14.29 trillion) is high in the pot where the public debt is “boiling.” The problem is that for now neither party wants to lift the lid in order to release some of the pressure. If the pot explodes, it will scald not only Americans, but also onlooking states, because the domino effect is unavoidable — something that we should have learned from our experience so far (the proliferation of the crisis in the 2008-2011 period).
While the parents were fighting, the family dog, Buck (the dollar), jumped the tall fence of $1.45 for a euro on Tuesday. I do not know how many countries can afford to see Buck running around crazily — as it is the most valued and a highly popular international currency — which is why on-looking countries find it particularly frightening.
The problem is that, no matter which solution is chosen, none will be able to cut down $3-4 trillion, the amount needed in order for the U.S. to maintain its AAA rating (given by Standard & Poor). If the rating drops, the U.S. will receive a very harsh blow, especially as it has had this rating since 1917 and it is the first time in its history when the rating is about to be downgraded.
American analysts are saying that the downgrade of the credit rating is no longer just a possibility, but more of a certainty. The blow will be felt, first and foremost, by small American entrepreneurs who do business with the government or benefit from federal funds and who know that if the federal government can no longer pay, they will be in big financial trouble.
At the moment, the U.S. has over 311 million inhabitants, out of which only 111 million pay taxes. If the entire debt is divided by their number, the amounts are truly terrifying.
If the debt is transferred to U.S. citizens, each American would have to pay $46,000 in order to cover the debt; but if supported by taxpayers alone, then the burden reaches $130,000.
The fact that the most powerful country in the world could face default is not good news for anyone, given that such an event would severely destabilize the global economy. The economic tensions reverberate in the rest of the world anyway: Japan was shaken and brought down to its knees by an earthquake and a tsunami and China is not doing very well either, particularly as the U.S. owes a trillion dollars to China, its biggest foreign creditor. We must not forget that in our playground, Europe, there are more problems than we can handle at the moment.
Overall, both the U.S. and the rest of the world want to resolve this issue in order to attain some degree of economic security, to the extent to which that is possible, of course, after a crisis that has left us extremely vulnerable from an economic viewpoint.
Unfortunately for us, no politician in the world can have primarily economic thinking, just as he cannot guard the interests of all the people who elected him; he can only look after his own interests and those of the people who supported him financially in order to obtain that position.
By the open window, all the countries of the world are fearfully watching the two parties fight, while the pressure (of approximately $14.29 trillion) is high in the pot where the public debt is “boiling.” The problem is that for now neither party wants to lift the lid in order to release some of the pressure. If the pot explodes, it will scald not only Americans, but also onlooking states, because the domino effect is unavoidable — something that we should have learned from our experience so far (the proliferation of the crisis in the 2008-2011 period).
While the parents were fighting, the family dog, Buck (the dollar), jumped the tall fence of $1.45 for a euro on Tuesday. I do not know how many countries can afford to see Buck running around crazily — as it is the most valued and a highly popular international currency — which is why on-looking countries find it particularly frightening.
The problem is that, no matter which solution is chosen, none will be able to cut down $3-4 trillion, the amount needed in order for the U.S. to maintain its AAA rating (given by Standard & Poor). If the rating drops, the U.S. will receive a very harsh blow, especially as it has had this rating since 1917 and it is the first time in its history when the rating is about to be downgraded.
American analysts are saying that the downgrade of the credit rating is no longer just a possibility, but more of a certainty. The blow will be felt, first and foremost, by small American entrepreneurs who do business with the government or benefit from federal funds and who know that if the federal government can no longer pay, they will be in big financial trouble.
At the moment, the U.S. has over 311 million inhabitants, out of which only 111 million pay taxes. If the entire debt is divided by their number, the amounts are truly terrifying.
If the debt is transferred to U.S. citizens, each American would have to pay $46,000 in order to cover the debt; but if supported by taxpayers alone, then the burden reaches $130,000.
The fact that the most powerful country in the world could face default is not good news for anyone, given that such an event would severely destabilize the global economy. The economic tensions reverberate in the rest of the world anyway: Japan was shaken and brought down to its knees by an earthquake and a tsunami and China is not doing very well either, particularly as the U.S. owes a trillion dollars to China, its biggest foreign creditor. We must not forget that in our playground, Europe, there are more problems than we can handle at the moment.
Overall, both the U.S. and the rest of the world want to resolve this issue in order to attain some degree of economic security, to the extent to which that is possible, of course, after a crisis that has left us extremely vulnerable from an economic viewpoint.
Unfortunately for us, no politician in the world can have primarily economic thinking, just as he cannot guard the interests of all the people who elected him; he can only look after his own interests and those of the people who supported him financially in order to obtain that position.