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The single European currency continues to strengthen against to the american dollar. This happens even though the state of the EU economy is still far from ideal, and the looming risks above it, which until recently made experts talk about the possibility of a collapse of the euro is still relevant.
Nevertheless, confidence in the dollar begins to decline. The main the reason for this is the continuing uncertainty regarding the ceiling of the US public debt, which the US Congress to raise, does not seem to intend. According to experts, if by Tuesday the news the background does not improve, today the excitement that captured the market may escalate into panic.
The head of the World Bank, Jim Yong Kim, added fuel to the fire, warned the american administration that from financial disasters are only a few days away. “I urge US politicians come to a decision sooner before it comes Deadline for raising the ceiling of public debt. Inaction may result in rising interest rates, falling confidence and slowing growth economics, “said Jim Yong Kim at a briefing after a meeting of members World Bank Development Committee. According to Jim Yong Kim, this will be a catastrophic event for both developing and developed economies.
Recall that currently Republicans and Democrats are not may agree on the US budget, as well as agree on public debt ceiling. If the state of uncertainty persists, The United States may face default.
Experts fear not only the intransigence of the Republicans, but also unshakable stance taken by US President Barack Obama. If it turns out that the reason for such intransigence is not a certain strategic maneuver, and banal human obstinacy and unwillingness to lose face, departing from their ideas, the situation may take a serious turn.
The fact that Obama is not yet ready for compromise, says his a decision to postpone a meeting with representatives of Republicans and Democrats scheduled for last Monday. According to White House administration statement, meeting was rescheduled for so that representatives of both parties have the opportunity continue negotiations on raising the public debt ceiling and adoption of the budget of the country. How long is the meeting rescheduled not reported.
It was previously reported that in the meeting on October 14 they were supposed to accept House Speakers John Beiner (Republican party) and Nancy Pelosi (Democratic Party), as well as leaders both parties in the Senate – Harry Reid from the Democrats and Mitch McConnell from republicans. Also expected presence Vice President Joe Biden.
Obviously, US technical default is not included in any plans. Republicans, nor Democrats, as this is definitely not voters will forgive. However, it is also clear that they are not I can compromise without at least a minimum concession from the president. They need it not so much for the implementation of some of their ideas how much to save face.
In this connection, in this situation, the only detonator an explosion, which could well not be, can only become Obama’s excessive perseverance. In this case, the protracted political games with economic matches can really lead to explosion and fire. So the possibility of default is the US, which just recently seemed completely unbelievable, today already Looks quite real.
In this regard, many are interested in the result of this default will occur with the dollar and its global dominance. Obviously, immediately after the default is declared, it is worth waiting for the fall the cost of US debt securities and, of course, the dollar. Between so such a drop, which occurs mainly on emotions, is unlikely will be long. After some time, it will become apparent that, no matter what, the dollar itself is not so bad, nor is it and the US economy itself. At least they both look Significantly better than the euro and the EU economy. There is also no doubt that soon the United States will be able to pay for its obligations. As a result, it seems almost inevitable the reverse market and the return of the dollar to lost positions, and, perhaps even higher.
Yuri LEVYKIN
Barack Obama Time USA Economy
