Saturday, July 16, 2011

The German (EU) view of the U.S. debt ceiling debate

How does the EU, specifically Germany, view the handling of the debt ceiling debate here in the U.S.

Following up on the article that looked at the potential consequences the political gamesmanship surrounding the debt ceiling debate in Washington could have, here is a small sampling of the way that Washington is viewed in Europe, specifically in German newspapers.

Interesting isn't it that we view the governments overseas as dysfunctional socialist states (which they are), while they view the United States as ...

From Germany, the gold standard economy of the EU:

Bild Zeitung

"Playing poker is part of politics, as is theatrical posturing. That’s fair enough. But what America is currently exhibiting is the worst kind of absurd theatrics. And the whole world is being held hostage.

"Irrespective of what the correct fiscal and economic policy should be for the most powerful country on earth, it’s simply not possible to stop taking on new debt overnight. Most importantly, the Republicans have turned a dispute over a technicality into a religious war, which no longer has any relation to a reasonable dispute between the elected government and the opposition."

"If it continues like this, the US will be bankrupt within a few days. It would cause a global shockwave like the one which followed the Lehman bankruptcy in 2008, which triggered the worst economic crisis since the war. Except it would be much worse than the Lehman bankruptcy. The political climate in the US has been poisoned to a degree that is hard for us (Germans) to imagine. But we should all fear the consequences."

Die Welt

"While Europe’s chaos is obvious to the Europeans and the rest of the world, there are few signs of self-doubt or self-awareness in the US. In the middle of the poker game between the two political parties to prevent a national default on Aug. 2, polls show that 77 percent of Americans believe that they live in the world’s greatest system of government. Just as many are convinced that life is only worth living as an American."

Allgemeine Zeitung

"The bitter debate in Washington about raising the debt ceiling has largely left the financial markets cold. … The market players apparently expect that an agreement will be reached in time. That's the only possible explanation for their surprisingly calm response."

"We can only hope that the top politicians in Washington take Moody's warning seriously, despite the relaxed response from the financial markets so far. A US default and a lower credit rating would … send stock prices through the floor and could choke off America's economic recovery -- with global repercussions. The politicians in Washington are playing with fire. A swift compromise is needed. Nobody needs a US default."


"Washington still considers a default to be unimaginable. Obama does not want to go down in history as the president who bankrupted America, so the only alternative is another unsavory deal -- the 'kick the can down the road' solution, as American politicians like to call it. The debt limit will be raised again just before the impending volcanic eruption, exacerbating the problem and postponing an attempt to solve the problem (of the US's enormous debt) to the next, not too distant deadline. Investors are also counting on this scenario. That is the only explanation for the relative calm on the market for US government bonds."

"That will change if the European Union crisis countries manage to sort out their finances, while the US continues with its debt delusions. Then the markets will soon achieve what the politicians have failed to do -- and force the US into an era of belt-tightening."

H/T Naked Capitalism

Please click the +1 if you enjoyed this article!

Delivery options for The Political Commentator (free of course):

Enter your email address:

Delivered by FeedBurner

Subscribe in a reader

No comments :

Post a Comment