Negotiations on the US public debt ceiling between Joe Biden and the US Congress broke down last Friday, but a new attempt is being made today. If Biden fails to convince the House of Representatives on his budget, the US government will be locked down and civil servants will no longer be paid salaries.
If things go wrong in the United States, it will also have far-reaching consequences for the rest of the world, according to Christine Lagarde, president of the European Central Bank. BNR’s in-house economist, Han de Jong, however, is getting a little tired of this claim. “Lagarde also says it’s unpredictable what happens next,” says De Jong. “But does he know it will be a catastrophe?”
“Debt ceiling will eventually be raised anyway”
According to De Jong, it will always work. He says the debt ceiling will “eventually be lifted” and that life will “go on merrily.” He points out that the contradictions are quite large, which means that the risk is clearly greater than in the past. “But to say that a catastrophe is imminent, I think is rather premature.”
‘Serious’
US macroeconomist Philip Marey thinks that in a possible ‘default‘ of the United States, there is a very serious situation, but everything will be fine for this very reason. “The moment you approach the abyss, both sides will compromise,” she says. “And eventually it will be decided to raise the debt ceiling.”
Even if the US money date is reached, according to Marey, the cuts will be made first on government officials and only then on bond payments. “Only the latter is really an issue,” she continues. “So we have to go through another phase before we get to the big problem. And by then the markets will already be moving quite a lot. This will prompt politicians to raise this ceiling in good time.’
Source: BNR
Sharon Rock is an author and journalist who writes for 24 News Globe. She has a passion for learning about different cultures and understanding the complexities of the world. With a talent for explaining complex global issues in an accessible and engaging way, Sharon has become a respected voice in the field of world news journalism.
