The end of the world is near. On Aug 2 to be precise. Repent and thou shall be saved.
Every year, some nutter prophecies the end of the world on some artificial date and his followers prepare for Armageddon. Come the day and nothing happens. We live on till the next prophecy. Is this what is going to happen on August 2nd, the latest doomsday deadline ?
Somewhere on August 1st or so, America will reach its legally approved debt ceiling of $ 14.3 trillion. Ninety times in the past, this ceiling has been raised by the US Congress and the Senate and life goes on. This time however, there is a real possibility that it may not be raised. Hence the doomsday.
Do I see you yawning ? Surely some technicality of American debt ceiling cannot affect you and me. Who cares ? Unfortunately you should. You should care very much, wherever in the world you are. It won't be the end of the world, but you will have a vision of what the end of the world might look like. For this is what will happen if the antics of the lawmakers in the US continues.
In August, the US will have revenues of $172 bn and expenditure of $ 307 billion. Pause for a moment and read this again - this is the level of madness at which the Americans have been operating. (Its a sobering thought that every major country in the world, barring China, has been equally mad; India is at the top of the madness stakes). So come Aug 2, if it cannot borrow anymore, the US can spend only what it receives ; therefore $172bn. So where does it cut. The top five spending needs are Medicare and Medicaid $50 bn, Social Security $ 50bn, Defence $30bn, Interest $30bn and Unemployment benefits $ 13 bn. All these themselves add upto $ 172bn. There's no money for anything else - paying salaries for government, or even turning the light bulbs on at the US Congress.
So cut everywhere it has to. When it cuts Social Security or Medicare, there will, metaphorically, be riots on the streets. When it starts to touch interest payments, however, is when the global impact will really come. For that will mean, the US defaults on its debt. But well before that, the US credit rating will be cut. Lenders will not lend anymore, or if they do, will demand much higher interest. Global confidence will be shattered. The dollar will sink. Markets around the world will violently swing and I guarantee you, its impact will be felt everywhere, even on you and me who are a million miles from America.
You would have thought that the wise men in America, who know all this, won't be so foolish as to let this happen. Unfortunately, these days, nutcases, exhibiting the highest sense of irresponsibility, have come to positions of power in the US. I am a diehard fan of America and Americans, but I have been wringing my hands at the amazing levels of depravity to which American politics has descended to.
I urge you to read everyday on the drama that's going on in the US on this debt ceiling issue. Its a real concern for the world - not just America. It affects you in a profound way.