Special Report: U.S. Debt Crisis
by Deng Yushan
BEIJING, July 28 (Xinhua) -- When countries across the world hold breath watching the debt negotiations between the Democrats and Republicans in Washington, they are once again "kidnapped" by U.S. domestic politics.
As the Aug. 2 deadline approaches for Washington to raise its borrowing limit and avoid a catastrophic debt default, deeply divided U.S. politicians remain stubbornly engaged in what is widely seen as a game of chicken.
Given the United States' status as the world's largest economy and the issuer of the dominant international reserve currency, such political brinkmanship in Washington is dangerously irresponsible, for it risks, among other consequences, strangling the still fragile economic recovery of not only the United States but also the world as a whole.
Analysts worldwide have already painted a grim picture. Although an exact outcome of a Washington unable to pay its bills is yet to be known, they warn that a U.S. default would trigger massive repercussions throughout global financial markets.
In that case, the analysts say, developing economies would suffer a traumatic blow, and the world economy would plunge into yet another recession on the heels of the one that struck in 2008 and also originated in the United States -- only the mess could be much nastier this time. Stock markets around the world have already displayed some signs of nervousness.
For the time being, numerous media reports, citing a variety of opinion polls, have shown that most investors across the globe are banking on a last-minute compromise between the United States' two main political parties.