The U.S. Senate passed the debt deal compromise today, ending this period of uncertainty about the fiscal future of America. If you are wondering what the rest of the world is making of this spectacle, this report in The New York Times offers some perspective from Europe and Asia:
Political brinkmanship in Washington, pushing the country close to default, has raised fears in the rest of the world that America is in for a long period of political instability that could have profound consequences for global growth, investment and diplomacy. Political leaders, economists and other financial analysts outside the United States expressed relief at a likely debt deal, but the big takeaway for many was that a minority in Congress could threaten the global financial system. The realization prompted some foreign observers to question the integrity not only of Treasury bills but even of American democracy.
This underscores the point that President Obama made in his address, the world really is watching with concern, trepidation, and now relief. Our allies will be encouraged that the U.S. can still manage our affairs, while our enemies will take stock of both our recklessness and our resolve to make hard decisions. Of course, it remains to be seen if hard decisions can really be made by the new Congressional “super” committee that will oversee spending cuts, but for now at least, disaster has been averted.
Image Credit: National Debt Clock/Wikipedia