Squabbling US politicians raise the ceiling for hubris
Government shutdown just part of the problem facing a country where money politics rules
How long can the US behave as dysfunctionally as it is without the US dollar collapsing or interest rates rising sharply as overseas investors such as China and Japan reconsider their positions in holding US government paper. Is it the beginning of the end of the United States as the superpower or even a global power?
The biggest proof of the arrogance of the US is that few Americans are asking the questions about the implications of a shutdown of the government on the American position in the world. The US is on skid row without understanding its plight.
The land of the free, the greatest democracy, the mightiest capitalist nation in the history of the world, the most powerful superpower the world has ever seen - all the wonderful things Americans like to say about themselves - is being run by children squabbling over who is really in power. Can anyone take such a country seriously?
As far as the foreign holders of US debt are concerned, you can be cynical and say that they are locked in.
To paraphrase Keynes, if you owe your bank $100 you are in trouble; but if you owe the bank $1 million, your bank is in trouble - only in this case we are talking about several trillions of US dollars in US government paper held by China and Japan.
They have invested in US dollars as the safest and best asset available. If they pull out, they risk taking major losses. But there comes a time when a prudent investor has to bite the bullet.
Even if times were normal, prudent foreign investors should be considering other options and cutting back on purchases of US government debt.