US playing a political game of chicken – journalist
E. Michael Jones, editor of a Catholic current affairs magazine, predicts the debt ceiling will be raised once again.
“And there is good and bad news about that,” he told RT. “The good news is there won’t be a default, but the bad news is that on August 2, the US will be faced with the same problem they faced on August 1 – that is, unrepayable debt.”
He also added there were political reasons for having to wait until August 2 instead of raising the debt ceiling today.
“Each side, the Republicans and the Democrats, are trying to extort some type of political benefit out of the crisis,” Jones argued. “The Republicans want to cut welfare benefits and the Democrats want to blame the whole thing on Republicans. That is a political game of chicken.”
According to Jones, the US has an obligation to other countries to sort this out because any US default will have serious consequences elsewhere. But whatever the consequences, he said, the US will somehow have to deal with the situation.
“You cannot do the impossible. And what the US is faced with now is an impossible situation,” he said. “It means someone is going to end up with the money, and someone is going to end up without any.”
The debt ceiling will just keep being raised every time the US faces default, Jones declared.
“The rating agencies will continue to lower their rating, they will have to pay more interest, which means the interest will accumulate much faster, and so they will just go faster into debt,” he explained.
Jones also stated that the debt cannot be paid off. The only thing the US can do is arrange month-to-month loans to pay off the last loan, he said, and there is no way to pay this debt off.
Michael Pento, a senior economist at the US-based Euro Pacific Capital, said Washington has an obligation to make sure foreign investors know the country will tackle its debt and deficit problems.
“Our debt is $14.3 trillion; no other country on Earth has such a huge debt,” he stated. “Our deficits are growing at $1.5 trillion per annum. We do not have that money available.”
Matthew Vadum, a senior editor at Capital Research Center and author of Subversion Inc., says it is essential for the government to raise its borrowing limit and keep on spending.
“Obama and the Democrats in Congress just want to continue spending. And they will continue to give rewards to their supporters among the labor unions and the various political organizations that are sympathetic to the Democratic Party,” explained Vadum.
“The US is able to keep raising its debt ceiling because investors around the world have confidence in the US,” said Vadum. “The problem right now is that the debt is so high that that in itself has started to become a negative factor that could lead to a credit-rating downgrade of the US government. If China loses confidence in America, the US would have nowhere to run to. The only choice they would have would be to keep printing money to inflate the currency or drastically cutting spending and implementing severe austerity measures.”