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Mainichi Shimbun, Japan

U.S. Must Prevent Yet Another 'Made in America' Catastrophe


"Less than three years after the Lehman Brothers collapse sparked a financial crisis that nearly tipped the globe into another Great Depression, it is unacceptable that the world may soon be plunged into another 'Made in USA' financial catastrophe."




Translated By Ryuichi Sato


July 27, 2011


Japan - Mainichi Shimbun, Japan - Original Article (Japanese)

Foreign holders of U.S. Treasury Bonds in billions.


FINANCIAL TIMES VIDEO: Ron Paul on the debt ceiling, July 24, 00:06:33RealVideo

With each passing day, the unthinkable grows closer: a default by the American government on U.S. national debt.


The deadline for the U.S. Congress to approve raising the country's debt limit from the current $14.3 trillion is August 2. If the legal ceiling on federal debt isn't raised by that date, the U.S. government will run out of cash, civil servants will stop being paid, Social Security checks won't be issued, and government services will grind to a halt.


But the most worrying thing about a default is that it would plunge global financial markets into turmoil and deal a massive setback to the world economy. The market still seems to find it "impossible" to believe this will be allowed to happen and that a last minute deal will be reached to raise the debt ceiling. But the value of the dollar has dropped to 77 yen, and the strain is beginning to show.


Since 1917, the debt-rating giant Moody's Investors Services has given U.S. debt its premiere AAA rating - and for almost a century it hasn't budged. The very fact that it has been considered the most trustworthy sovereign debt in the world for so long makes it hard to predict what the effects of this crisis will be.


However, even as the world sweats over the looming financial catastrophe, Washington gazes only inward, fixated on its political game of chicken. Far from narrowing, the gap between Republicans and Democrats appears to be widening, making a compromise even harder to reach.


The Republicans want to raise the debt ceiling in two stages - the first this year and the second in 2012 - with negotiations on serious budget cuts to begin with the second stage. Their goal is to time the second stage and accompanying budget cuts to land in the middle of the 2012 presidential campaign. They hope to shake up their Democratic opponents at the critical time before the polls. Meanwhile the Democrats are pushing to have the debt ceiling raised enough so that the issue won't arise again until after the election, avoiding a pitched battle over budget cuts.


It is of course natural for politicians in democratic countries to look toward the next election. That is particularly true of members of the U.S. House of Representatives, who have to face the voters every two years. These lawmakers tend to constantly play to their constituents to improve their chances of retaining their seats. For Republicans who swept to a majority in the House in the last midterm elections, this means taking tremendous pressure from the conservative grassroots movement the Tea Party, which helped propel the Republican Party to victory and is dead set against raising the debt limit.  



However, protecting the national interest and the full faith and credit of the dollar should be a far greater priority. An agreement on raising the debt limit is urgent, as is the necessity of drastic cuts in the deficit. A half-hearted deal would invite a downgrade of U.S. debt, perhaps triggering a short-term crash in the value of the dollar, long-term hikes in interest rates and plummeting stock prices around the world.



Yomiori Shimbun, Japan: U.S. Lawmakers Should 'Stop Playing Political Games'
Yezhednevniy Zhurnal, Russia: The U.S. and Soviets: Pyramid Builders to Raiders
Frankfurter Rundschau, Germany: 'Radical' Republicans Threaten U.S. with Ruin
Tiscali Notizie, Italy: The Fiscal Decline of the 'Apocalypse'
News, Switzerland: Notion: 'Pay Politicians Based on Performance'
Salzburger Nachrichten, Austria: Debt Ceiling Attack By Republicans 'Backfires'
Gazeta, Russia: America's Astonishing 'Battle for the Ceiling'
People's Daily, China: U.S. Game of Chicken Threatens Creditors and Economy
Die Zeit, Germany: U.S. Risks 'Plunging World' Into New Financial Crisis
O Globo, Brazil: Global Economy Hangs on 'Mood' of U.S. Voters
The Telegraph, U.K.: Down on the Fourth of July: The United States of Gloom
Financial Times Deutschland, Germany: For Americans, a Dour Independence Day
Financial Times Deutschland, Germany: Who Cares about the U.S. Economy?
Folha, Brazil: U.S. Conservatives Threaten to Plunge U.S. into 'Lost Decade'


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"We can't allow the American people to become collateral damage to Washington's political warfare," Obama said during an address to the nation calling for compromise. But the damage resulting from a failure to break the impasse will not only be felt by Americans.


Less than three years since the Lehman Brothers collapse sparked a financial crisis that nearly tipped the globe into another Great Depression, it is unacceptable that the world may soon be plunged into another "Made in USA" financial catastrophe.



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[Posted by WORLDMEETS.US July 29, 4:19am]


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