A quick note before you begin the journey of reading this post: As I am currently studying for exams (Psychology), I have not been able to write my daily posts. This post was started a few days ago, before the "temporary solution" signed by the USA Congress to avoid defaulting on their loans. Idjits.
A US debt default could hit on Thursday, and world leaders are second
guessing the dominant role America plays in finance. Regardless of the
final decision in Washington, confidence and credibility in the US has
In an editorial published by the Chinese
state-owned press agency Xinhua, a columnist says the US economy
has ‘failed’ and put many countries who hold state assets in
dollars, at risk.
“To that end, several corner stones should be laid to underpin
a de-Americanized world,” the editorial read.
Last week China, the biggest US creditor, started to make
preparations for a technical default on loans. The European
Central Bank and the People’s Bank of China (PBC) have agreed to
start supplying each other with their currencies, avoiding the
dollar as an intermediary currency. The currency swap agreement
will last for three years and provide a maximum of 350 billion
Yuan ($56 billion) to the ECB and 45 billion euro ($60.8 billion)
to the PBC.
In a further sign of growing distrust, China introduced a so-called “haircut”, or
a discount, on the value of US Treasuries held as collateral
against futures trades.
Developing and developed nations are equally concerned, and
institutions like the World Bank and the International Monetary
Fund (IMF) have issued several warnings.
Christine LaGarde, managing director of the IMF told the US they
must uphold their financial promises to the international
community and raise their debt ceiling. Failing to do so would
put the world “at risk of tipping yet again into a
recession,” LaGarde said in an interview on NBC’s ‘Meet the
Press’, which aired on October 13.
“You have to honor your signature, … give certainty to the
rest of the world,” LaGarde urged the US, a strong supporter
of the international lending tool.
The country that has long provided a sturdy backbone to the
global economy is now teetering on a mass default. If US
lawmakers don’t forge a solution to raising the debt ceiling by
October 17, investors with US treasury bonds, one of the
lowest-risk assets, could suffer.
“It’s not just China that’s at the mercy of US lawmakers, its
everybody in the world that is at the mercy of US lawmakers right
now,” David Kuo, Investment Advisor, Motley Fool told RT .
“China is trying to diversify away from US Treasuries,” said
Kuo, adding investors “cannot just assume an asset is 100 percent
China holds nearly $1.3 trillion in Treasuries, Japan has $1.14
trillion, and other big foreign creditors include Caribbean
creditors, Brazil, Taiwan, Russia, and European nations.
Other creditors have decided to keep calm.
Russia, ranked the 11th on the list of the US top creditors with
the estimated $132 billion in US Treasuries, plans to keep their
"I don't see the need for revising our reserve investment
strategy in US Treasuries," Russian Finance Minister Anton
Siluanov said at a press conference on October 11 following a
meeting of the G20 finance and Central Bank chiefs.
“What’s happening now, I hope, is a fairly short-term
situation,” Siluanov told reporters, noting Russia’s
investment plan is long-term.
If the US misses the debt ceiling deadline of October 17 and stops paying
their creditors, it would be the first major Western government
to do so since Nazi Germany under Hitler in 1933, which wasn’t
able to pay their debts following World War I.
The US has a bank holiday today in honor of Columbus Day;
however, after making little headway on solving the budget gap,
both the Senate and the House will hold sessions on Monday.
For Republicans, Obamacare has been a major stumbling block in
agreeing to raise the debt ceiling, as they see the legislation
as antithetical to their ‘small government’ philosophy. - RT
Our economy is strange. We are a strange folk. I suppose that makes it a little easier to see why our economy is strange.
What the hell kind of a plan is it to base an economy on debt? There are so many things that happen in this world that we are not aware of, things that are actually the back-bone of our economy. Now everyone is blaming America for the "economic depression" - but don't you know that depression is a state of mind? Depression is a state created wholly by our participation and belief in a series of experiences, where we relive the same experiences over and over without recognizing that in order to stop the depression we must move ourselves out of this repetitive pattern we find ourselves in.
Everyone is in debt to everyone else.
Everybody owes somebody else.
Everyone is owned by the money they owe.
Everyone is a slave to the state of mind of the economy which is a figment of our imaginations.
Kind of makes you wanna scream, doesn't it?
What kind of reasoning must one have to bring an entire country to it's knees to try and avoid giving the citizens of said country decent healthcare without them having to sell their souls for it? But then what about the side effects of ObamaCare? This is most certainly not a win-win situation. This whole debacle only shows us that this is not the solution as the solution would be undeniable. Unfortunately the solution would remove the power from the hands of those few who hold majority power, and so the solution never quite gets popular. The solution goes against most of the things most people believe, because our beliefs have actively been shaped and influenced throughout our lives to maintain the power-structure as it is now.