The Threat from the U.S.

That most countries of the world were living beyond their financial means, nobody doubts. The financial crisis uncovered a serious situation endemic to various countries, from Greece to Ireland, from Portugal to Italy. Even the colossal debt of the U.S. is far from being a problem of yesterday — the day that, for the first time in history, at the hand of the dreaded financial ratings agencies, the country lost its AAA rating and was downgraded to AA+. This came from left field; until recently, the failure of Lehman Brothers that shook the world two years ago and put the American economy into recession was considered much worse.

So the only question that matters is: Why now? Economists and too many specialists have given varied, vague and not very enlightening answers. Some speak purely speculatively, but the large majority provide another much more generally agreed upon explanation: We are facing a political problem in the U.S., a war between Republicans and Democrats with Obama’s re-election at its crux in the end.

But what happens in America does not stay there. This unprecedented cut in America’s chances of paying its debts threatens to have much larger and more serious effects on the worsening global financial crisis. Europe, already facing debate surrounding a serious Euro crisis, has the most to fear. With Italy and Spain under pressure, and after interventions in Ireland, Greece and Portugal, the European Central Bank decided to hold an emergency meeting today, a Sunday in the middle of August, and the same might happen with the G-7. Meanwhile, top leaders, like Sarkozy and Cameron, are interrupting their vacations to make the required urgent contacts. The goal is to present a solution that reins in panic and prevents another Black Monday on the markets.

This solution, more than ever, will have to be global. And it will still probably require Europe to ally with the U.S. In this truly frightening turbulence, it could be that Portugal will still benefit from the comprehensive measures that cannot be delayed.