The Strategist

Is America on The Verge of Default?


03/17/2015 - 14:42



US national debt exceeded 18 trillion and reached statutory "ceiling” on Monday, reported the Ministry of Finance. From Monday and until the approval of Congress new borrowing US Treasury will take "extraordinary" measures to continue to pay for the obligations of the government. The United States is one of the few countries where the law is set "ceiling" of government borrowing.



pixabay.com
pixabay.com
US Treasury Secretary Jack Lew warned the Congress that the national debt limit is reached on and recalled that the need to raise the "ceiling" of debt does not mean that Congress will allow the government an additional cost. It just allow the government to finance expenditures already approved by Congress, he said. - reports Financial Times.com

It is a sad milestone for America ​​- commented the situation chairman of the National Committee of the Republican Party Reince Priebus in December. He recalled how in 2008, Obama criticized George W. Bush for the fact that under his rule the US national debt increased by $ 4 trillion.

American television channel Fox News said that when Barack Obama led the United States in 2009, the national debt stood at 10.6 trillion dollars. During his presidency, the US national debt has increased by 71%, or more than $ 7.5 trillion. The Blaze Edition also announced an alarming level of public debt and quoted Sen. John Boehner, asserting that Americans because of the high national debt "robbed" their own children and grandchildren. Then a month later in February, Obama signed a bill to raise the US debt ceiling.

A similar situation was in the United States in 2011. Then the parties could not come to an agreement for almost three months, which almost brought the country to a technical default. For the first time in history then the rating agency Standard & Poor's downgraded the sovereign rating of the United States.
In 2013, the government interrupted the work for 16 days due to the fact that the Congress could not agree on the budget, which also rests on the question of the debt ceiling. As a result, the plank was raised, as the representatives of both parties realized that their opposition spoils the reputation in the eyes of voters.

In fact, the achievement of the national debt ceiling means that from now on the US Treasury will be forced to use only the remaining cash at the moment, as well as ordinary incomes to the federal budget, most of which are taxes. In addition, we are talking about manipulation of Treasury securities owned by government funds and trusts. This is called "resort to extraordinary measures." Based on expert calculations, these measures will help to fulfill the government's obligations to the period from October 1 and December 31, 2015. Up to this point, Congress must decide whether they should raise the debt ceiling, otherwise, the country threatens to default on its debts. However, we should clarify that the United States has never brought the situation to a critical point.
 
It is worth remembering that the United States national debt in 2013 amounted to 106.6% of GDP, and in 2014, according to preliminary estimates, it reached 109.9% of GDP, according to Strategic Culture Foundation. According to the source, a high level of public debt in 2014 caused a stir as Japan (234% of GDP), Greece (183% of GDP), Portugal (148% of GDP) and Italy (139% of GDP). Not so far away from them are Belgium (135% of GDP), Spain (132% of GDP), France (104% of GDP) and the UK (92% of GDP).
The countries with the lowest relative levels of public debt are: Saudi Arabia (3% of GDP), Russia (9% of GDP), China, as well as Australia - 31% of GDP and Norway (34% of GDP). The total public and publicly guaranteed debt of Ukraine in 2014 reached 71.5% of GDP, according to Ukrainian portal Finance.ua with reference to the National Bank of Ukraine. According to the agency, in 2013, Ukraine's public debt relative to GDP was 40.9%. - 




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