US Republicans using weapons of mass financial destruction- Sir Ronald Sanders

US Republicans using weapons of mass financial destruction

The impact of the government shutdown on the US economy, which is still the world’s largest economy, will be felt worldwide says Sir Ronald Sanders.

By Sir Ronald Sanders 

Sir Ronald Sanders

Sir Ronald Sanders

 Caribbean360 News – Barbados, Thursday October 3, 2013 – There will be a lot of rubbish in Washington over the next few days.  And, that rubbish is not only the garbage that is steadily piling up in the nation’s capital because of the government’s shut down.  It is also the quality of the Republican Party’s argument for refusing to pass a Budget that would allow the federal government to provide goods and services to the public.

While the Republicans have obstructed Budgets before – notably in late 1995 and early 1996 when Bill Clinton was President – there is more than a little racism toward this first non-White American President by the right wing Tea Party element even though they have not dared to say so.   

The Republican intent in refusing to adopt the government’s budget is to sabotage the Affordable Care Act – President Obama’s health programme that would give coverage to all – that has been labelled “Obamacare”.  Incidentally, there have already been over 30 attempts to stop it.

What the Republicans are doing is nothing short of blackmail – in more ways than one.   So far, President Obama has stood-up to it.  But, this battle looks as if it will persist, bringing hardship to many and even threats to the security of the country.

Those issues have been well detailed in the international media and no purpose would be served by rehearsing them here.  It is with the international impact that this commentary is concerned.

The impact of the government shutdown on the US economy, which is still the world’s largest economy, will be felt worldwide.  For instance, with over 800,000 federal government workers not being paid and hundreds of contracts to the private sector not being honoured, there will be fewer people thinking of holidays and this will affect tourism, including to Caribbean destinations that rely heavily on US tourists.

Caribbean countries will also suffer from a decline in remittances from many of their migrants who either work directly for the federal government or are employed by private firms that provide services for the government.

Official development assistance from the US to developing countries is also now suspended until a budget is passed and government spending can resume.

A great part of the world, therefore, has a keen interest in the high-stakes poker game being played out between President Obama and the Democratic Party on the one-hand and the Republicans pressured by their right-wing Tea Party faction on the other.

The government shutdown is one issue but the more serious problem is raising America’s debt ceiling from its current level of $16.7 trillion.  By October 17, the US Congress must raise the debt ceiling or the US will default on payments of its debts.   The mere prospect of such a default has already adversely affected the global stock market. An actual default would bring into question whether the US dollar should be retained as the world’s main reserve currency and it would certainly compromise its value.

Many countries – including the majority in the Caribbean – have tied the exchange rate of their currencies to the US dollar.  Therefore, if the value of the US dollar declines in the wake of a default on debt repayment, there will be an automatic devaluation of those currencies that are tied to the US.  If countries have debts or trading arrangements that are denominated in other currencies, say the Chinese Yuan, the size of their payments will rise in equivalence to the decline in value of the US dollar. At the end of September, the Yuan’s value was up against the dollar for nine consecutive weeks.

For some small countries – particularly those in the Caribbean that are already highly indebted – this development will increase their debt burden and gravely challenge their capacity to avoid default themselves.

The truth of the matter is that these fights in Washington are presented as disputes over the budget and the debt ceiling but they are really about next year’s mid-term elections.  The Republicans are determined to weaken President Obama and to lay the blame for the government shutdown squarely at his feet in the hope that the electorate will vote against the Democratic Party.  If the Republicans can also force Obama to abandon his signature health care Act, they will claim a massive victory and a major humiliation of a President whose face they have long wanted to grind into the dust.

On the two previous occasions (this is the third year in a row) when the debate over raising the debt ceiling has raged, it was President Obama who made concessions.  This is obviously seen as a sign of weakness by his Republican opponents who will push him to the wall again over raising the debt ceiling even if the budget issue is resolved by October 17.

In all this, the Republicans have done the United States no good.  Within America, government services have halted, hundreds of thousands are living lives of uncertainty with no pay packet, and there is widespread dissatisfaction and frustration.  From outside, the US governmental system looks dysfunctional and weak.  Its reputation as a model to be adopted is now fractured and confidence in its global leadership has been severely undermined.  No one in the US has gained from the antics of Republican Party representatives in Congress, not even the far-right Tea Party who can claim no benefit for America.

Dysfunctional government occurs elsewhere in the world including in the Caribbean but, for the most part, the countries involved are too inconsequential to impact the global economy.  Not so with the United States which, however the present debacle unfolds, must now understand that the same prescription they give to others to reduce their debt applies equally to them.  If they fail to do so, the irresponsible dysfunction of their system will continue year after year.

In the meantime, other governments should take every precaution to safeguard their countries from the extremes to which the Republican Party appears ready to go – even to the point of using weapons of mass financial destruction within their own borders.

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Comments

  • Dr. Hewick  On October 6, 2013 at 6:11 pm

    Politely, Sir Ronald seemingly you know nothing about our politics here in the US except from what you read in the mass media. A meticulous scrutiny of your information and the illogical conclusions you make convinced me that you are a racial bigot and pointedly racially drunk. Please stick to your Caribbean politics and don’t attempt to be an expert on our politics because its too grandiose for you to comprehend and for you to make any sane conclusions. Lux fiat.

    • Thinker  On October 7, 2013 at 9:36 am

      Why don’t you provide the Lux?

  • Rosaliene Bacchus  On October 6, 2013 at 6:15 pm

    Thanks for sharing. The right-wing Republicans in the US Congress have no view of the world beyond their bubble.

    • Dr. Hewick  On October 6, 2013 at 8:29 pm

      Respectfully, do you? If you do, please share it with us so that we can be enlightened by the enlightened one. Thanks.

  • Gloria  On October 6, 2013 at 10:19 pm

    Dr. Hewick seems to be a member of the Republican Party or more accurately the Tea Party.

  • de castro compton  On October 7, 2013 at 12:41 am

    As an “alien” (outsider) let me add my penny for what it is worth…..
    Most americanS are not only ill-informed but also un-informed….

    TOO BIG TO EXIST

    WEN DI BUBBLE GEH TOO BIG IT AH BUST….

    if it burst naturally on expansion so be it…
    However if it burst un-naturally (man-made) it is sad/fatal for Americans.

    Their currency will be TP (toilet paper) on world markets.

    Zimbawee dollar comes to mind…

    Cynically yours

    Kamptan…dem Chinese already switched to EURO as a hedge bet…

  • de castro compton  On October 7, 2013 at 2:40 am

    There is an old saying……..
    Don’t put all your eggs in one basket…..

    New saying
    Diversify to survive

    Darwin
    Survival of the fittest of the species

    Kamptan
    Survival of the most adaptable of the species

    AMERICA WILL SURVIVE

    ALL DEM LIL BOYS THAT ALIGN TO USDOLLAR….are but fools in paradise…

    The British Pound is a floating currency…not unlike water it finds its own level..
    yet it is the most valued currency on the planet/markets…..why !

    I am neither economist or politician and will let the answer to my question
    remain open to discussion/speculation

    Just Google ” exchange rates” for an update on “markets perception” facts.

    £ = Euro (my Google tablet keyboard does not have euro or dollar sign) why not?
    Purchased it in UK made in China …!!
    £ = USD CAD

    £ = Swiss franc

    PURE SPECULATION with politricks in mind…

    Enjoy/disagree/comment or delete …the choice is ours

    Kamptan

  • de castro compton  On October 7, 2013 at 7:25 am

    Ha ha !
    Drinks his tea in a “tea-cup” with the Royal emblem….

    Seriously our learned friend has an opinion like you and I Gloria…
    Please please let’s refrain from “personal character assassinations”

    Let’s keep guyanese on line protocol alive

    Reading writing can be misunderstood…until we exchange “words”

    RESPECT to all regardless of their political orientation/ethnicity/opinions.
    “abuse” can be verbal as well as physical…..
    Kamptan

  • Clyde Duncan  On October 7, 2013 at 3:52 pm

    This USA Government shut-down and threatened default on the USA credit has nothing to do with the Republican-Tea Party extracting policy concessions from a Black POTUS – President of the United States; rather it is everything to do with a determined effort by a right-wing white minority to ensure continuation of their white supremacist policies in the United States of America.

    Read the White Man’s Last Tantrum: http://consortiumnews.com/2013/10/04/the-white-mans-last-tantrum/

    • Dr. Hewick  On October 7, 2013 at 10:11 pm

      Clyde, gentlemanly said. As a corollary to The White Man’s Last Tantrum by Ben Kinchlow makes for good reading. I know you’ll find it interesting reading and informative. Take care, stay healthy, and forward looking.

      • Dr. Hewick  On October 7, 2013 at 10:14 pm

        Clyde, correction, the book by Ben is Black Yellow-Dogs

  • de castro compton  On October 7, 2013 at 4:11 pm

    Serious stuff….but oh so true….!

    Any society where 1 % control 99% of its wealth is doomed/deemed a failure…

    Worse scenario
    America defaults…USD becomes an internal currency (legal tender)
    What happens next depends on how the market views this….
    But hey instantly AMERICA IS FREE FROM DEBT….

    Makes USA a very safe place to invest in…the Chinese would certainly wish to acquire access to their natural resources…on the cheap !

    One Yuan one dollar….
    Wow wow !
    Wonder what the 1% think of this….?

    Hey this is all speculation but it is possible…think about it !

    America is once again competitive…exports/manu fracturing instant boom….

    Lot to digest/regurgitate

    Kamptan

  • guyaneseonline  On October 8, 2013 at 12:52 am

    The White Man’s Last Tantrum?
    October 4, 2013
    Exclusive: With the U.S. government shutdown and a threatened credit default, Tea Party Republicans are testing out a new system of national governance in which they get their way – or else. But is this the beginning of a new Jim Crow era of imposed white supremacy or just the white man’s last tantrum, asks Robert Parry.

    By Robert Parry

    American pundits are missing the bigger point about the Republican shutdown of the U.S. government and the GOP’s threatened default on America’s credit. The real question is not what policy concessions the Tea Partiers may extract, but rather can a determined right-wing white minority ensure continuation of white supremacy in the United States? Read more..
    http://consortiumnews.com/2013/10/04/the-white-mans-last-tantrum/

  • Clyde Duncan  On October 8, 2013 at 2:10 am

    His Excellency, Sir Ronald Sanders, is undeniably right!!!

  • gigi  On October 11, 2013 at 3:29 am

    People who get their news from the US media with its monopolistic business interests and its dependence on gov’t handouts, welfare, and contracts aided by its massive lobbying efforts and the revolving door and cozy relationships between government and these businesses who buy the elections of politicians, including the current president (who has received the most donations from insurance companies and others in the medical field and is now paying them back with the gift of Obamacare), should be very skeptical of what the media talking heads are yacking about.

    And BTW, all the warnings about Obamacare are materializing. I was on the exchange pricing plans in my state and they cost way more than the plan we have with our employer. So for those who don’t have insurance because they couldn’t afford it. Now they will be required to pay for that expensive insurance or pay the gov’t a fine every year if they cannot afford it. That’s free money for the gov’t, and insurance companies no longer have to compete for customers. There are now plenty to go around, especially since they a small handful of large monopolized giants anyway.

    Republicans may be reviled for being the party of the rich, but this current democratic administration takes the the cake.

  • de castro compton  On October 11, 2013 at 10:00 am

    Excellent writings…so exact in its analysis….
    Please Gigi let me take it a step further…..

    Best scenario Republicans back down….
    Worse scenario Obama and USA DEFAULT….

    but as I forever the optimist….

    BRAZIL defaulted twice in as many decades….now Brazil is a loan-shark…
    one of dem money lenders….IMF WORLD BANK MAFIA CHURCH ROYALS et all…

    AMERICA is now owned by China India BRICS et all…

    USD would then find its own level in world markets….
    One USD = One Yuan rupee et all…

    Overnight USA in boom…not doom or gloom.

    The ways I see it

    Kamptan hope I am right.

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