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The Independent: The accumulation of sovereign debt puts the United States in the face of serious crises


London-SANA After the sovereign debt in the United States reached an unprecedentedly huge level, exceeding 31.46 trillion


After the sovereign debt in the United States reached an unprecedentedly huge level, exceeding $31.46 trillion this year, Washington finds itself facing several crises, according to the British Independent newspaper, which suggested that the American economy would face 13 risks due to the huge debt.

The newspaper pointed out that the volume of US sovereign debt increased by 95.7 percent in the last 10 years, with an average annual increase of about 9.57 percent, as the volume of US debt jumped from the level of $16.07 trillion at the beginning of 2013 to about $31.46 trillion at the present time, with an average annual increase. It amounts to about $1.539 trillion.

The newspaper pointed out that the US Treasury, after the sovereign debt reached this huge level, resorted to applying exceptional measures that would enable it to avoid default and finance the budget until June 2023, but the existing differences between Republicans and Democrats and the policy of the so-called (edge ​​of identity) increase fears that it will be affected. The US economy, whether Congress decides to raise or suspend the US debt ceiling.

The Independent highlighted the sharp differences in Congress between Democrats and Republicans who insist on the principle of increasing debt on the condition of reducing expenditures to contain the federal budget deficit, while US President Joe Biden and the Democratic Party insist on the need to raise the debt ceiling without conditions, warning Republicans of the brinkmanship policy about raising the ceiling. Debt.

With regard to the repercussions of the sovereign debt crisis on the United States, the newspaper indicated that the prospects for a US economic recession have strengthened, as estimates by Moody's credit rating agency indicate that the US gross domestic product may contract by nearly four percent in the event of an exacerbation of the crisis and failure to finance the government deficit.

The crisis also coincided with pessimistic expectations by international institutions regarding the performance of the US economy, as the International Monetary Fund expects slight growth this year, while The Independent enumerated some of the most prominent risks facing the United States with the continuation of the crisis, including a decline in consumer and corporate confidence, which causes great harm. In investment and employment operations, especially with the rise in interest rates, which increases the cost of credit.

In addition to the above, the debt crisis also leads to a decrease in employment rates, an increase in the unemployment rate, and a downgrade in the credit rating of the United States, similar to what happened during the debt ceiling crisis in 2011 when Standard & Poor's downgraded the credit rating of America.

A number of risks facing the United States, according to the newspaper, are also linked to defaulting on obligations, including social security payments and the salaries of federal civil servants and others, in addition to a partial shutdown of the US government, capital exit, and a decline in stock markets, and this may prompt some investors to divert their investment destinations from US stock markets to international stocks and other foreign government bonds.

According to estimates by Goldman Sachs, the Standard & Poor 500 index fell by about 15 percent during the debt ceiling crisis in 2011, while Moody's expects that the current crisis and the possibility of default may result in a decline in stock prices by about a third.

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Source: sena

All news articles on 2023-03-05

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