The Empire's Fall

There is no messing around with public debt, as outlined under Section 4 of the 14th Amendment to the United States Constitution. The financial world’s outlook is highlighted by the results of the negotiations that are being carried out today, regarding the United States’ debt ceiling. President Obama has indicated he rejects the idea of obtaining approval from the House of Representatives and subsequently, the Senate. Regardless of the setting we will confront in August, it is highly likely that it will be a program aimed at lowering the huge $3 trillion deficit. It is noteworthy to mention that in the U.S., a rigorous program to lower benefits and military expenses and cut back the welfare programs will very likely commence. It is estimated that focusing on the beneficiaries of these previously mentioned programs will help lower government spending by $600 billion.

Many analysts predict a grim picture; more than one has ventured to say that the empire’s fall is imminent. A reduction in the American government’s debt classification is expected and as a result, a rise of short-term interest rates is also expected. However, a rise on long-term interest rates cannot be predicted with reasonable certainty, in a world with a high instability rate which offers few safe havens. Moreover, precious metals — for instance, gold and silver — will continue to be a favorite for investors on a larger scale. A preference in currency from developed countries like Australia, New Zealand and Canada will also be noticeable. It is not seen as a good haven to consider the currency from emerging countries, much less the euro. Furthermore, assets in the yuan are not available in the stock exchange.