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| US system of global dominance risks collapsing in a matter of months May 16, 2023 |
| 2023-05-17 |
| Direct Translation via Google Translate. Edited. [REGNUM] If it is impossible to raise the ceiling of the US national debt, a technical default will threaten as early as the first days of June. There are other predictions, according to which the US Treasury will still have enough free funds until mid-June. And there will come new tax revenues, which should be enough for another month and a half. This is how the US government has to live - literally from paycheck to paycheck. Panic is rising in America around the threat of a technical default. According to the US Treasury, the country will run out of money in early June, and a default from a hypothetical scenario will become quite possible. But the longer you watch the default drama, the more what is happening resembles only a carefully staged political performance, which at the very last moment will end, as they like in Hollywood, with a “happy ending”. The situation around the default escalated due to a technical procedure called the debt ceiling. It began to be introduced at the beginning of the 20th century to limit government spending in the US budget. However, this was not achieved, the debts of the American government continued to grow, and for a long time Congress disciplinedly raised the ceiling of the national debt approximately every year and a half. For the first time, problems with the debt ceiling happened in 2011. Immediately after their victory in the congressional elections, the Republicans delivered an ultimatum to the administration of Barack Obama. Either they will go to reduce government spending, or legislators will no longer raise the ceiling of the national debt and bring the matter to default. After a long debate, the Republicans and Democrats still managed to find a certain compromise. But for several weeks the country was in a nervous state, and Standard & Poor's even downgraded the US credit rating. Now, 12 years later, history is repeating itself. The Republicans won the congressional elections again - and they again want to reduce government spending. Since January, the Republican majority in the House of Representatives has refused to raise the national debt ceiling, demanding meaningful concessions from the White House. Republicans are concerned about quite objective problems with a sharp increase in US government spending. The US budget deficit could reach a record $2 trillion this year. This was caused both by an increase in defense spending and by indexing social benefits to inflation, which is currently at a high level of 5% in the United States. However, the Joe Biden team flatly refuses to make any compromises with the Republicans. She is quite satisfied with the current very high level of government spending of more than 6 trillion dollars. And Democrats accuse Republicans of wanting to take away social benefits and benefits from low-income Americans. Republican Speaker Kevin McCarthy's first meeting with Biden took place in February. Then they didn’t have any contact for three months. And they saw each other face to face again only in mid-May, when the approaching deadline with an increase in the national debt ceiling is already making many in America nervous. Republicans seek to cut spending on "green programs", one of the priorities of the Democratic Party, and on international assistance to other countries, which is also very important to the White House. The total savings could be just over $100 billion this year, which is just a drop in the ocean in terms of the entire US budget. After all, no one in Washington wants to touch the main areas of spending - including the defense industry and the social sector. However, even for such small spending cuts, the White House is not ready to go. Meanwhile, the clock is ticking. According to the most alarmist forecasts, if it is impossible to raise the ceiling of the US national debt, a technical default will threaten as early as the first days of June. There are other predictions, according to which the US Treasury will still have enough free funds until mid-June. And there will come new tax revenues, which should be enough for another month and a half. This is how the US government has to live - literally from paycheck to paycheck, not being able to borrow until the national debt ceiling rises. At the same time, no one really knows what will happen if a default is declared - estimates of the consequences for the United States range from quite mild to the most catastrophic. American economists often argue about whether there have been defaults in US history. The official version says that they did not happen. Although individual episodes during the 1812 conflict with Britain or the Civil War, when there were delays in debt servicing, can be interpreted as a default. The last incident occurred in 1979, when due to a technical failure for a short period of time the US Treasury did not pay interest on some bonds. However, now the situation is much more serious. Over the past decades, the world economy has become globalized and hyper-financialized. The US technical default, if it does occur, will cause a real shock therapy in all corners of the planet. And especially among the closest allies of the United States, be it Japan, the United Kingdom and the EU countries, which have significant investments in US Treasury bonds. It is not for nothing that now credit default swaps on US Treasury securities - a kind of insurance against default - have increased in price tenfold. And in terms of cost, they already bypass the default insurance of countries like Brazil, Mexico and Greece, where there are traditionally many problems in the financial sector. And Moody's raised the probability of a US default to 10%. And the closer the deadline, the higher the chances of America's credit rating being downgraded, which will lead to even more panic on the stock markets. A US technical default is guaranteed to result in the loss of hundreds of thousands or even millions of domestic jobs. It will almost certainly plunge America into a new recession, which is already beginning against the backdrop of the current economic stagnation. Financial markets around the world will collapse, and the dollar will also collapse. And, most importantly, this will be a huge blow to the US reputation as a reliable borrower with a stable economy and a well-functioning political system. It will turn out that the economy is not stable, and the political system does not work, since the two branches of government - Congress and the White House - are not able to make decisions on raising the national debt ceiling. Other countries will begin to sharply rethink their relationship with the United States, at least refusing to invest more in US bonds. The entire US military machine, with 700 bases in 130 countries and 12 aircraft carriers, will also be in an unclear position. After all, money for its maintenance will cease to flow, there will be nothing to buy fuel for tanks, fighters or ships and pay salaries to military personnel. The processes of de-dollarization will sharply accelerate, because confidence in the American currency will be completely undermined. Against the backdrop of such financial turmoil, the West will simply have to forget about further support for Ukraine. The US system of global dominance, built over decades, is in danger of collapsing in a matter of months. However, despite all the drama of the situation, there are big doubts that the US will bring the matter to default right now. Congress and the White House are currently participating in the famous American game - which of the cowboys blinks first, he loses. Therefore, it is worth waiting for the intrigue around raising the debt ceiling to last until the very hour X. And at the last moment, it suddenly turns out that the contradictions between the parties have been resolved, they still managed to agree and avoid a default. But in this case, Washington will only shelve the problem with a huge state budget deficit and a rapidly growing public debt. This year, the US could spend up to $1.5 trillion on paying interest on its debt, which is almost 20% of the entire budget. According to forecasts, by 2033 the US national debt will grow from the current $30 trillion to $50 trillion. In this case, up to half of the entire state budget will have to be spent on its maintenance. This will put the US at the level of many Latin American countries, living from default to default. It is not for nothing that the former president and current presidential candidate Donald Trump is seriously suggesting that Washington right now declare a default, settle the issue with its debts and move on to a balanced budget. Trump thinks like a real businessman who has repeatedly declared bankruptcy of his companies that bring losses. In the short term, this will lead to major shocks, but in the long run it would even play into the hands of the United States. But among the political class of Washington, no one thinks for a long time - if the public debt is enough for their lifetime, then it's fine. But by their actions, they only bring the collapse of the US debt pyramid closer - and then America will face a default that is not at all technical, but already quite real. May 16, 2023 Malek Dudakov |
| Posted by:badanov |
| #4 Is it me, or has every damn dummy Become at some point Billy Mumy And ditched his toy gun For a genuine one? [gut-shot Liberty clutches her tummy] |
| Posted by: Shavish McCoy6193 2023-05-17 19:40 |
| #3 ^ Never underestimate Joe Biden's ability to fuck things up. |
| Posted by: Abu Uluque 2023-05-17 14:18 |
| #2 And I'm afraid Kevin McCarthy is right when he says that the Biden administration will "bumble into a default." They really have no idea what they are doing. I am reminded of the comparison of being tied to a chair while a 3-year-old plays with a loaded pistol. |
| Posted by: Tom 2023-05-17 11:08 |
| #1 Bet on the Ruble and Russia collapsing first. |
| Posted by: Enver Slager8035 2023-05-17 01:24 |