The budget battle in Congress continues in Washington. As the government shutdown enters its ninth day, we are nowhere closer to a resolution that would end the stalemate.
What’s worse, the bigger issue at stake—the debt ceiling—is looming on the horizon. Congress must increase the debt limit by October 17 or risk defaulting on government obligations.
The default of the U.S. government would be catastrophic according to many economists, and President Baracak Obama.
“In a government shutdown, millions of Americans face inconvenience or outright hardship," the president noted at a press conference on Tuesday. "In an economic shutdown, every American could see their 401k's and home values fall, borrowing costs for mortgages and student loans rise, and there could be a significant risk of a very deep recession.”
While the domestic consequences could be grave, the international consequences could be just as dire.
International markets have a very close eye on the negotiations taking place in Congress. Stephen King is HSBC chief economist, and author of “When the Money Runs Out: The End of Western Affluence.” He argues that what we are seeing is not just damaging for the U.S. economy, but a sign that the days of American and Western prosperity are over.