The western world has been watching with troubled fascination and concern Greece's slow march into financial collapse. The proud crucible of modern civilization and our democratic institutions begging with extended hand for relief from European neighbours while its people riot in despair along Athens historic avenues.
Greece's twice bailed-out multi-billion dollar national debt is roughly equivalent to $44,000 for each of the small country's 11.5 million inhabitants. Yet each of its economic tremors has rocked investors and banks in the financial capitals of the world for much of the last 12 months.
Ponder a nation with a population of 311.5 million people with a multi-trillion dollar national debt which (in fact) equals $45,000 for each of its inhabitants? Such is the looming brick-wall of the debt crisis facing the United-States of America. The Government of the United-States reached its statutory $14.29-Trillion debt limit on May 16th: But for the grace of God, and only by using a series of accounting techniques and voodoo economics has the Obama Administration been able to continue issuing debt and paying its bills for now just short of two months...and time is running-out rapidly.
Last Friday, on the eve of the Independence Day weekend, the U.S. Treasury advised that it can only maintain the "illusion" for another month: Max! The gloomy Fourth of July forecast confirmed that the Government of the United States of America, the world's most powerful economic engine,"could begin defaulting on its $14.3-Trillion debt on August 2, 2011."
The world's foremost debt rating agency, the financial services giant Standard & Poor's, has already confirmed it will lower the U.S. credit rating from AAA to D - its lowest rating - if political Washington can't find a way out of this morass. Unlike Greece there is no conceivable possible world bailout for a fourteen (plus) trillion dollar bill that the American Congress with the tacit approval of its people has accumulated on the country's credit card.
With now less than a month to go, and shadowed by a looming Presidential re-election bid in 15 months, the Obama Administration needs a compromise just short of a miracle with the Republicans who control Congress...
So far the Republicans have said they will not agree to resolving the country's debt ceiling problems unless a deal is struck first to cut the United-States deficit by $4-Trillion in the next 10 years. Those talks are at an impasse over the President's insistence on increasing taxes.
Economists are plenty alarmed, and in financial and banking circles the talk of a financial Apocalypse is thick. There are clear warnings of credit markets in a state of panic, and of steep interest rates, coupled with Draconian spending cuts and tax increases if the U.S. defaults.
But at least so far, among most Americans the dire warnings appear to be falling on unconvinced ears. Why? It's not unlike the bumper sticker sported on some cars when the world as we know it was supposed to end back on May 21: "After the Rapture, can I have your car?" - Some experts blame "doomsday fatigue." They say in recent times Americans heard that things were going to go haywire with the turn of the millennium (Y2K), and they didn't. They were primed for post September 11 terrorist plots that did not unfold. Time after time they've seen Congress come to the brink, only to pull something out of its hat. In short this could be one critical instance where Washington's past tendencies to cry wolf and stage histrionics on issues of the day has left everyone unprepared for an eventual economic shakedown with worldwide ramifications.