Debt Ceiling: Was America Really Ever at Risk of Defaulting?
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And what would it have been like for the US and the rest of the globe, had the worst happened?
For a number of weeks, the whole world had been watching with bated breath to see if talks between the Republicans and Democrats would unravel on the subject matter of America’s debt ceiling.
Debt ceiling, surely if it was only a domestic issue, why should we be bothered with the wrangling and bitter partisanship between the two major American parties?
But it really wasn’t a domestic issue; it was potentially a massive crisis with profound ramifications for a number of major economies:
With the world’s largest economy running a huge deficit with China, Japan and a number of European countries, a debt default would have caused all kinds of problems which most folks around the globe cannot begin to comprehend.
Saudi Arabia, whose biggest earnings come from oil, would have unraveled almost immediately, with untold consequences for the Mohammed Bin Salman and the incredibly decadent Saudi royal family.
What we saw during the Arab spring (which was also known as the Twitter revolution) in Egypt, Libya, Tunisia, Syria and Yemen, would have paled by comparison to the social and economic fall-out of America’s debt default.
The Communists Party of People’s Republic of China, for all of its careful and meticulous economic planning would have been exposed and a few of its industries would have gone under.
Nations across Latin America and Sub-Saharan Africa would have fallen apart too.
With these events, it is all too easy to forget traumatic episodes from the recent past and the closest example that I can give is Russia.
It is 1998.
Russia has only just emerged seven years earlier from the ruins of communism, with the Soviet Republic splintering into 15 states.
No sooner had the disintegration of the Soviet empire taken place than the United States swooped in, prescribing all kinds of neoliberal policies to the fledgling democracy.
As expected, Russia became recipient of loans from the International Monetary Fund which came its stringent…
