Debt Ceiling Debate: The World Economy is Resting on Our Shoulders. Come on “Plan B”

by Ayvaunn Penn, Your Black World

Time is lethally ticking, and there is now less than a week left until the U.S. runs out of money. Government leaders around the world are getting nervous now. According to Reuters, a board member of the Bank of Japan stated, “As the world’s biggest economy, the U.S. would have an immeasurable impact on global financial markets and Japan would not escape the damage. Valerie Pecresse, France’s budget minister says, “The global economy needs an American agreement…WRAPPED UP IN A BOW.” Simply put, everyone’s nerves are being frazzled by this U.S. governmental stalemate. Reuters reports:

“A Republican plan to cut the U.S. deficit faced delay and stiff opposition on Wednesday, raising the risk of default and a ratings downgrade as the clock ticks toward a deadline less than a week away. Deeply divided Republican and Democratic leaders are scrambling to find common ground before August 2, when the government is expected to hit its $14.3 trillion borrowing limit that could trigger a default and roil world markets.

Even if that fate is avoided, a budget plan that flinches from hefty cuts in the deficit could result in a downgrade of America’s top-notch credit rating, raising borrowing costs and dealing a severe blow to the country’s weak economic recovery. After weeks of acrimonious debate, the contours of a possible deal have emerged but Republicans and Democrats are digging their heels in on some key demands and blaming each other for putting politics ahead of the national interest. Lawmakers need to carve out a budget plan to clear the way for Congress to raise the borrowing limit.”

Despite the urgency felt by many others, the vote on a deficit plan put forward by the head Republican in Congress has been moved from Wednesday to Thursday. Yesterday, the White House announced that they are collaborating with Congress on a “Plan B” that will hopefully bring this haggle to a close before time runs out.

This stalemate has caused stocks around the world to drop but especially in Europe. As a result, investors transitioned their funds into safer mediums such as gold and Swiss francs. Due to all of this, it is reported that insurance against a U.S. debt default will be at an all-time high for next year.

Ironically enough, Reuters reports that “there have been no signs of panic in markets because most investors expect a deal will be struck by the deadline.” Reuters proceeds to share, “Obama and Treasury Secretary Timothy Geithner have stressed the government will run out of room to borrow funds on August 2, next Tuesday. But Treasury officials have never said when the government will exhaust its funds to pay the nation’s bills and the consensus among Wall Street analysts is that the cash will not run out until about two weeks later than that” — as if that enough extra time to make anyone feel significantly better.

Ayvaunn Penn is the founder of Your Black Poets and an award winning writer completing her degree in English and philosophy. To inquire about her freelance editing services, click here. To like Ayvaunn on Facebook, click here.

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