The USA is on the verge of a default. If Washington politicians do not come to an agreement on raising the debt ceiling, this pessimistic scenario can become reality in a few days, for the first time in the history of that country. The head of the IMF Christine Lagarde has declared that the global economy will feel the consequences of this. The confrontation between US President Barack Obama and the Republican majority in the Congress has reached its peak. The global financial system has become a hostage of political squabbles in the US Congress, Garegin Tosunian points out:
“The financial market cannot be completely insured against any force majeure. However, if we analyze today’s situation in the USA we can see that it is just a political struggle. If we remember the previous years, opposing parties often agreed to increase the state debt sum, but can this go on forever?”
Still, GareginTosunian believes that a technical default in the USA is hardly likely. On the other hand, he is convinced that in any case Washington’s monopoly in the global economy and finance is coming to an end:
“Even if there is no announcement of a default, which I believe will be the case, the current situation in the world is pushing the dollar and the US monopoly to the ditch of the global economic space. The influence of the US currency will be gradually dropping and the USA will not be able to consider itself the only country dictating its conditions to the whole world. The euro, which appeared over 10 years ago as a competitor to the dollar, is the proof of this. Today’s forex resources, at least in Russia, are commensurable to the dollar and the euro.”
The head of the parliamentary Committee on the Economic Policy and Enterprise Yevgeny Fyodorov has a similar opinion. In his interview for the Voice of Russia he noted that the USA may lose the title of the world’s largest economy. This is obvious because the USA is buying more than it is selling and the state expenditure is higher than tax revenues, so the government is constantly borrowing money, Yevgeny Fyodorov says:
“America’s political monopoly provides for its economic monopoly. The default actually means that the Americans are living beyond their means. Using their political influence they as good as rob other countries. 4.5% of the world population consume 40% of the global GDP. I do not believe that the Americans will ever pay their debts.”
The whole world is watching America at the moment. If the state debt level is not raised the government will have no money for current expenses. Foreign debt interests will grow and the stability of state bonds and the US dollar will be up in the air. In this context, many experts predict a new wave of the global financial crisis, compared to which the 2008 tsunami will seem a caressing wave.
Interestingly, some analysts insist that such a shake-up is what the global economy needs right now. It will facilitate the transition from old economic models to new ones. Incidentally, many countries, Russia included, have already put forward proposals about dismantling the unidirectional political and economic arrangement of the world. These proposals include establishing new reserve currencies, regional ones as well, that will be controlled by the whole of the global community, rather than one country. In that case we can expect a real competition between currencies and economies instead of new crisis balloons threatening the whole world.