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O Globo, Brazil

Global Economy Hangs on 'Mood' of U.S. Voters


"Itís hard to imagine that due to a tug of war between Democrats and Republicans, an American default could occur, with all of the serious consequences this would entail for the country and the global economy. Ö a few years ago this would have been regarded as pure fiction."




Translated By Brandi Miller


July 12, 2011


Brazil - O Globo - Original Article (Portuguese)

President Barack Obama: Body language experts would have no trouble detecting that this man is under stress.


WHITE HOUSE VIDEO: President Obama gives his perceptions of debt crisis talks with Republicans, July 11, 00:41:33RealVideo

On the calendar of the global crisis - the most severe since the 1930s, September of 2008 is a kind of ground zero. That was the month that Lehman Brothers went insolvent, the Bush Administration wouldnít rescue it from collapse, and a shocking freeze of credit-shock spread across the planet at computerized speed.


Another candidate to enter onto such a calendar would be August 2nd, for a reason that just a few years ago would have been regarded as pure fiction: on that day, the United States, for the first time in history, will default on its creditors - that is, if Republicans and Democrats donít come to an understanding on raising the U.S. debt ceiling, which today stands at $14.2 trillion and which will be exhausted in early August.



Itís hard to imagine that due to a tug of war between the Democratic and Republic parties, an American default could occur, with all of the serious consequences this would entail for the country and the global economy, which, with Europe's sovereign debt crisis, is already obliged to live on a knife's edge.


President Barack Obama has taken over negotiations with the Republicans, and there were meetings at the White House over the weekend. Yesterday afternoon there was another.


Republicans have been represented by House Speaker John Boehner. Until the latest session scheduled for yesterday, Boehner had refused Obamaís proposal to pursue comprehensive tax reform that would have allowed for savings of $4 trillion over ten years. The Republicans prefer a more modest goal of $2 trillion.


The conflict is a sad comment on how the issue has been contaminated by electoral considerations. That Congress needs to raise the public debt ceiling, as it has several times, is not in dispute. That is because the public accounts of the United States, along with those of a good portion of the world, are unbalanced due to the necessary restructuring of the banks, the preservation of industries (GM, Chrysler), the provision of resources for the unemployed and the injection of dollars into the system in an attempt to revive the economy. There was no alternative.



Die Zeit, Germany: U.S. Risks 'Plunging World' Into a New Financial Crisis
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'
Rzeczpospolita, Poland: Who Can Replace America as the World's Policeman?
Kayhan, Iran: Instead of Celebrating July 4, Obama Should Repent for Flight 655
The Nation, Pakistan: Seeing the Fourth of July Through Pakistani Eyes
Yezhednevniy Zhurnal, Russia: Why Unlike U.S., Russia Lacks Holiday to Freedom


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Just over a year before a presidential election, the request for Congress to raise the debt ceiling was an opportunity for Republicans to lash out at Obama. The opposition to the White House doesnít want to commit to the more ambitious goal of $4 trillion because it doesnít want to allow the Obama government to obtain one red cent from tax increases - and he is seeking $1 trillion from that source.†††



This would be done, for example, by allowing Bush-era tax breaks for high-income earners to expire. In exchange for some tax relief for lower-income families, there has already been one extension negotiated with Democrats. This tax rebate for the rich expires on January 2013, and Obamaís plans donít call for another extension. Moreover, Republicans want deep cuts in public health and social spending, which are considered untouchable by Democrats. Among Republicans, the Tea Party is exerting tremendous pressure. So the stability of the global economy depends on the mood of American voters.



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[Posted by WORLDMEETS.US July 13, 3:19pm]


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