I was just waiting to see if the United states of America would go the Keynes way AGAIN !, The country may be heading towards a situation where in the old-age dependency ratio will have to translate into growth in the Tax burdens in the near future owing to the rate at which its population is ageing coupled with falling fertility but that doesn't substantiate anything for us to be sure if the move by the republicans to curtail peoples right to have a better healthcare is the better way to make things better, but all those debt, someone has got to pay that debt someday and many from the rest of the world wouldn't want to be those people in the future who might have to lose their pensions to the false promises made by the US of paying them back handsomely, Chinese have been subsidizing the cost of living of millions of Americans for some time now, and most other Asian countries including India have been subsidizing their cost of living by consuming their produce at a higher cost and providing them services at the cheapest cost possible. As for this move to shutdown the functioning of the government I feel that it just shows some kind of prudence on their part for not placating themselves to be worthy enough to gobble up more debt Again, but this also raises many uneasy questions as well because this is happening just after the 2008 melt down and people are not sure if the world is out of it yet, and what would happen to those core industries which are drivers of the world economy which for sometime have been surviving on the improbable notion that growth will happen some how even if it means at the cost of cheap money.
The markets around the world have been under the impression that some kind of last minute deal would be struck between democrats and republicans which would stall things being pushed to the extreme, most of the markets dint have enough time to factor in this new development, Shanghai's composite index, Japan's nikkie , hong kongs Hang seng closed now and dint have enough time to react, things would be grim tomorrow as these markets open, once this new development has been factored in by the Asian markets the movement of the indices upwards would definitely mean that dollar might weaken even more against the Asian currencies including rupee. As of now its imperative to note that an economy which always has its eyes on prudence will take sufficient measures to avoid such an inconvenient situation not the other way around like getting itself into such a situation and trying to peddle through it, With all due respect to some analysts who seem to be suggesting that this is some kind of daily occurrence which doesn't require our scrutiny, I have this to say it is this attitude that gave too much power to credit default swaps to wreck the entire US housing market which led to the subprime crisis and to all the subsequent events that followed the Lehman brothers collapse, placing ones trust on the ability of the US economy to adapt is one thing but that shouldn't be too blind enough to discount the conditions which has prompted such an event to occur, US economy is reeling under a huge pressure which is prompting it to enforce such measure's, if this debate between the republicans and democrats continue leave alone they deciding to raise the debt ceiling it will lead to huge uncertainties because raising the debt ceiling doesn't mean it gives enough room for the government to borrow more money to spend on things to keep the economy going but it only allows the US government to payback the money it has already borrowed, the markets know this and they will react accordingly.
