Nevermind Greece, the USA is Close to Defaulting on it’s Own Repayments

All the talk around the financial world of late has been the state of the Euro and particularly the problems in Greece, but the USA is now facing the same issue, defaulting on it’s repayments. Unable to pay it’s bills.

What should be an unthinkable state of affairs is getting closer to reality by the day as US politicians hold their economy to ransom as Republicans and Democrats refuse to strike a deal over raising the US debt limit.

Despite politicians constant reminders to the American people that they are facing economic armageddon, they seem to be incapable of fixing the situation.

The stark reality of the matter is that if the politicians don’t make an agreement to raise the US debt ceiling by Friday, the likelihood of there being enough time to get the legislation through Congress before the August 2nd deadline would be slim.

If the USA were to default then it would have enormous implications to the American economy, for example the cost of borrowing would become massively more expensive, mortgages, loans etc. Benefits might not be able to be paid by the Government.

Because the US economy is so heavily intertwined with the world’s economy, it could have a knock-on effect similar to the banking crisis just a couple of years ago.

The problem has arisen because of party politics. The two parties have become entrenched into their opposing positions with neither willing to back down. Political brinkmanship at its best? Or worst? Time will tell.

Republicans have entrenched themselves into the ‘give us big spending cuts’ before we agree to raise the limit, Democrats are then saying ‘we won’t agree unless we also raise taxes for the rich’, Republicans turn back and say ‘no we are not raising taxes’.

People are dismayed at the situation but have faith that when push comes to shove, a solution will be found even if it is last minute and even if it is some kind of ‘plan B’.