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Friday, October 28, 2016

Washington (AFP) – U.S. President Barack Obama warned Thursday that America’s political dysfunction had encouraged its enemies and depressed its friends, and said the crisis had left “no winners” in Washington.

Obama called on warring politicians to come together to pass a long term budget and to give up the “brinksmanship” that threatens the economy and squandered the trust of the American people.

The president spoke less than 11 hours after signing legislation that ended a 16-day government shutdown and a showdown over raising his government’s borrowing authority.

The bill brought a temporary end to a stand-off that had threatened to pitch the U.S. economy into a historic default.

Obama urged Congress, specifically Republicans in the House of Representatives, to now come together to pass stalled legislation on agriculture and on reforming America’s immigration system.

“There’s been a lot of discussion lately of the politics of this shutdown,” Obama told an audience of returned executive branch workers in the State Dining Room of the White House.

“Let’s be clear. There are no winners here. These last few weeks have inflicted completely unnecessary damage on our economy,” Obama said.

“Probably nothing has done more damage to America’s credibility in the world, our standing with other countries, than the spectacle that we’ve seen these past several weeks,” Obama said.

“It’s encouraged our enemies, it’s emboldened our competitors and depressed our friends who look to us for steady leadership.”

AFP Photo/Saul Loeb

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Copyright 2013 The National Memo
  • idamag

    If I were to cross the water, I would keep my mouth shut all the time so they wouldn’t know I was from my own country. They would be treating me like a five-year-old because that is what they think we are.

    • TZToronto

      Tell ’em you’re Canadian (unless you’ve got a really prominent accent).

  • dtgraham

    I agree with the President. Unfortunately this is likely groundhog day. It’s all set up to happen again in 2-3 months. This is just a series of bad sequels at this point. The U.S. government used to be ‘Gone with the Wind’…’s now ‘Rocky V’.

    I kept hearing from the GOP and conservative media types that default was no big deal. You can just choose to pay the debt interest and take the money from elsewhere. The suffering can be done internally. That is just breathtakingly stupid. Federal revenues only cover about 64% of federal spending due to: i) decades of tax cutting designing a tax structure where revenues will probably never meet expenses ii) wars iii) a weak economy. Borrowing makes up the other 36%.

    That means that the federal government would have to cut 36% of it’s spending on 24 hours notice, and this is the largest purchaser of goods and services on planet earth. That wouldn’t lead to a default on the debt immediately, true. What it would lead to is the most abrupt economic shutdown since 1931. If you cut 36% of U.S. federal spending overnight, it would mean that suppliers don’t get paid and those supplier’s suppliers don’t get paid and their supplier’s suppliers don’t get paid all over the world, and people get laid off. It would be an economic catastrophe.

    Right now Canadian 10 year treasury bonds are trading at lower interest rates than American bonds. Canadian short term debt (30 day debt) is trading at a basis point lower than American 30 day debt (.05 vs .06). Mexican bonds are only about 80 basis points more expensive than American bonds, which is pretty shocking. When have those things ever happened before? International finance markets are nuanced and they’re reacting. America no longer has a functioning democracy in 1/3 of it’s gov’t branches and that’s not a state secret anymore. The odds of default have gone from zero to not zero. That is the kind of change in exact margins, producing such a warp shift in financial possibilities, that it is going to have endearing consequences. Make no mistake about that.

    This has all happened with “only” 1 shutdown and no technical defaults, so far. However, just this continual ‘on the edge’ brinksmanship is enough to do serious damage over time. These tea bagger Congresspeople have got to get their teeny tri-corner brains around the idea that the complexities of international economics and finance can affect their country’s standard of living in negative ways. You have interest rate effects from both short and long term money. There are effects on business optimism and confidence, and consumer outlook is very grim. Gallup had a recent poll reporting that the U.S. is back at 2009 levels of economic anxiety. Suppliers throughout the world have to wonder that if I have a customer who has a customer whose customer is the United States’ government, will I be paid?

    Among geopolitical concerns, the Chinese dumping American bonds is probably not one of them. The Chinese don’t hold American bonds because they like Americans. They don’t even hold American bonds because they think it’s still a good investment. They hold them as a crucial part of their own currency manipulation strategy. If China were to dump a trillion dollars tomorrow, the U.S. dollar would go down and the Chinese currency would go up. That would make it more difficult for China to export which would lead to unemployment. That’s not likely to happen.

    What the Chinese can and will do is send a message to American allies in the region (Malaysia, Phillipines, etc…) that the U.S. is not reliable. They can seriously damage American prestige and trust and encourage those countries to gravitate towards a stable protector.

    Canada and the European Union are finalizing negotiations on a comprehensive and economic trade agreement that will deepen relations to the point where Canada will have voting privileges within the E.U. due to the parallel Canada-EU strategic partnership agreement. This will lessen the level of involvement in the U.S. led Trans Pacific agreement. I’ve heard nothing to suggest that the timing of the CETA and CEUSP is anything other than coincidental but, to me personally, the timing is both curious and telling as these negotiations began in earnest at the same moment that the new Republican Congress began making noises about shutdowns and defaults 3 years ago.

    With the world’s largest economy, largest military, and world’s reserve currency (for now) we’re not talking any kind of material changes overnight of course, but until America can fix it’s political system and stabilize it’s democracy, this process of de-coupling and so called Chinese “de-Americanization” will happen to some extent. That’s just my humble opinion.

    This is important because no one should want a future world led by the People’s Republic of China. I’ll still take the United States…tea baggers and all.

    Sorry for the lack of brevity. I’ve found myself with some time and had some things that I wanted to say.

  • Michael Kollmorgen

    Our International Reputation has been going down the tubes ever since the Iraq War.

    Regardless how bad it was at that time, it’s going to take the United(?) States years to re-cultivate our International Reputation back to where it was before the “almost” complete shutdown of our government.

    If I were Al-Qaeda – our sworn enemy and China – our major competitor, I’d be tickled pink (they probably are anyway) about now.

    The Republican Party should be “proud of themselves” for nearly destroying a country.

    Just about everyone of them should be tried for Treason!