The U.S. Budget Battle: The End of American Prosperity?

Wednesday, October 09, 2013

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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.

Guests:

Stephen King

Produced by:

Tyler Adams

Editors:

T.J. Raphael

Comments [4]

Kris Jacobs from minnesota

where have you been for the last 30 years? You are a little late for this parade, Mr. King

Oct. 09 2013 02:04 PM
Larry Fisher from Brooklyn, N.Y.

Welcome to the end of the world where every day is Halloween and none of us are sure we will make it to that Holiday...

I would like to see if the Author Stephen King could write quite as a horrific portrait of our future as your guest Stephen D. King just presented...

Oct. 09 2013 01:43 PM
CAROLINE from NJ USA

It's very strange to me that wealthy Americans [members of the House of Representatives in particular - those in the minority) are so invested in keeping the working poor, poor, or poorer than they already are. What is that? Wouldn't it be a good thing to raise everyone up with fair wages, equal pay for equal work? The wealthy can afford healthcare, why not have general, affordable health care for everyone? I'd think there would be more money in the pockets of the wealthy when they are invested in economic rewards for everyone. Each person adds to prosperity, not just the wealthy, but all kinds of people, diverse backgrounds, enriches the entire culture, economy of the USA.

Oct. 09 2013 12:46 PM
Roger Knudsen from Winesburg, OH

King is right--as far as he goes. The reality of our economic future is driven by a complex and sometimes competing factors. For a more comprehensive view, read Harry S. Dent and his analysis. Dent views demographics as a major driver of national and global economic trends. One upshot: Countries like China are in serious future difficulty because of their rapidly aging populace and low birth rate.
Other emerging economies have relied on exploitation of their natural resources for growth, largely driven by sales of those natural resources to China. As China collapses (see Japan, Inc. of the 1980's), these resource-driven emerging economies will also be negatively impacted.

Net/net: It's too early to write off the US economy, although we will go through a 5-8 year malaise starting now until the next population boomlet pumps the economy.

Read Harry.

Oct. 09 2013 09:28 AM

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