If I was a senator causing mischief by actively contributing to the closure of governmental activities and threatening to prompt an unprecedented US default, I would be severely upset by the wonderful collective shrug that is coming from the markets. Across the board, the reaction is like a parent towards a petulant child – just let them cry and stamp their feet – no real damage will be done, and eventually they will stop and come in for dinner before it gets dark!!!
If politics had a bad name before any of this happened, just understand what further damage is being done now! I think this latest sorry episode of politics in America has now moved so far away from the design of the system and wishes of the voter, that any conclusion will be seen as having caused unnecessary confusion and hardship. International sympathy with the likely US analysis of why this process `had to happen` will be in short supply. Harking back to the `basis of the constitution` is all well and good, but that fine set of principles is being bent out of shape by rogue users.
Whatever the outcome, as an interested outsider, my first thought is `just how can this farce be avoided in the future`? There is obviously no point in putting a proposal to the representatives of the existing system; how do you make the people who revel in their influence, change the process? However, there is no way that this can become the new normal. To effectively threaten to push the world into an unprecedented situation where the benchmark notion of `triple A` does not exist, should not be an option available to a bunch of US politicians.
The point here, is that potential global financial chaos could ensue at the behest of the American House of Representatives (this time!), and that cannot be right. Just imagine the outcry from America if this was happening elsewhere – but of course the fact is that it cannot happen elsewhere. The American bond market is the cornerstone of world finance, and it has become too important to leave in the hands of a system that was never meant to have these global repercussions.
A talking head was quoted the other day as saying that a US default would have an impact `10 times the size of Lehmans`. Even if that could never happen (!)(?), to have a system alive and well in one country that theoretically makes it possible is wrong and needs modification.
I don`t know enough about the US constitution to suggest ways that this could happen, but after all this is over, I would be very surprised if there was not domestic and international pressure for a re-appraisal and review process to make the current system in the US less of a threat to the rest of the worlds finances.
