The whole world is waiting for the next move of the United States and how far the Republicans and Obama are willing to push the game of brinkmanship before someone blinks. Failure to raise the debt ceiling of $17.6 trillion by Oct. 17 will leave the US with only $30 billion in its treasury to meet its commitments – triggering a debt default that could bring on a devastating economic disaster whose effects are far worse than we can even imagine.
Our research show the US has defaulted a couple of times in its history. The first one was in 1790 when Treasury Secretary Alexander Hamilton held off interest payments – for 10 years – on the debts assumed by the fledgling nation. In 1933, the US under President Franklin Delano Roosevelt refused to pay investors – specifically Panama – in gold as prescribed by a 1903 treaty due to the Depression. In 1979, the US was late in making payments amounting to $122 million due to a “computer error.â€
US billionaire Warren Buffett had compared the consequences of a US default to “nuclear bombs†– something too horrible to contemplate as stock markets all over the world will go into shock. Many however are hoping the disaster could be averted, with both Obama and the recalcitrant group led by Republican House Speaker John Boehner coming to their senses and agreeing on a compromise – although there are no indications at the moment that such will be the case. Many believe a default is unlikely, but the current situation has made it very clear that it is no longer a zero possibility.
While the global markets are jittery, the first ones who would feel the shock are actually Americans receiving Social Security pensions since the biggest owner of US debt is the Social Security fund. A plunge in the value of US Treasuries would cause the dollar to devalue – which could make other economies unstable, an analyst warned. A survey among Americans show that 25 percent of respondents believe both Republicans and Democrats are to blame for what’s happening in the United States – but a bigger percentage (44 percent) say the blame should go to the Republicans while the rest say the fault lies with Barack Obama and the Democrats.
While State Secretary John Kerry tries to downplay the political infighting that’s happening in the US – saying the situation is proof that democracy is very much robust in America, and characterizing the shutdown as a temporary disruption, the situation has triggered a lot of uncertainty over America’s role as a global leader. And so the waiting (and the blame) game continues, with the US Congress entering a crucial phase in the “war†over the budget.
Chinese pork ham: Made in the US
China is obviously watching the developments in the US not only because the two countries are rivals for global supremacy, but due to the fact that about $1.2 trillion or approximately 11 percent of all US debt is owned by China. In fact, a lot of US companies and businesses are being acquired by the Chinese, the latest of which is Smithfield Foods which was very recently bought by Shuanghui International for $4.7 billion – the largest acquisition to date of a US company by a Chinese buyer.
Smithfield is the biggest pork producer not only in the US, but the whole world with facilities in 26 US states plus 13 in China. The company employs about 50,000 people worldwide, and produces over 2.7 million tons of meat every year. The buyout has naturally triggered anxiety among American hog raisers, although a spokesperson said the acquisition will translate to “expanded opportunities†for the US pork industry and will mean increased exports to China. Last year, Chinese acquisitions reached record levels with deals amounting to almost $8 billion, the biggest of which include Dalian Wanda’s buyout of US cinema chain AMC Entertainment for $2.6 billion and Sinopec’s $2.4 acquisition of huge stakes in oil and gas developments from Devon Energy, one of the biggest US-based independent and natural gas producers in the world.
Observers note China’s rise as an economic powerhouse over the years. According to sources, China now has more foreign currency reserves than any other nation on the planet; it has the largest car market in the world; it is the leading manufacturer of goods; it uses more cement than all the world combined; it consumes more energy than the United States; it is the top producer of wind and solar power and it is the number one supplier of defense components. Most of all, it is poised to become one of the biggest employers of Americans on account of its numerous acquisitions of US businesses.
‘Double standard’ winner
Regardless of who between the University of Santo Tomas Growling Tigers and the De La Salle University Green Archers will emerge as the 76th UAAP champion, the biggest winner will be none other than former PBA star Alvin Teng – whose sons are playing in both teams. Oldest son Jeric is playing for UST while the younger Jeron is a forward for La Salle – and the two will be engaged in intense sibling rivalry as both teams gun for the championship during Game 3 at the Mall of Asia Arena this Saturday.
Teng (in photo) is the picture of a “half-hearted†father judging from his yellow and green shirt with the names of his boys and their jersey numbers printed in the middle. Oops... Teng reminds me of myself and many others like me who, according to our late friend Max Soliven, are “crazy mixed-up kids†having gone to both Ateneo and La Salle.
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Email: spybits08@yahoo.com