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US cannot afford to default on its debt - journalist

Published time: June 29, 2011 23:09
Edited time: June 30, 2011 07:11

America's credit rating will be slashed from perfect to 'selective default' if it fails to pay its bills by the August 4. The US national debt amounts to over 14 trillion dollars at the moment - and Obama wants it go even higher.

­“Most economists and analysts agree that at some point before August 4 the national debt ceiling will be raised, because if it doesn’t, there’s going to be a global effect if America defaults on any of its loans,” claims Ricardo Young, host and analyst at Voice of Russia Radio.

However, when asked about the outcomes of America’s possible default on its debts, Obama was very vague about what might happen.

One of the reasons ‘why’ is that anything that the president of the United States says about this economy and its debt problem is that the global markets will react. And there’s no way that he can say this will happen or that will happen, because if he does, then the global markets will start reacting to what the president predicts or says,” explained Young.

While the Republicans keep saying President Obama needs to show leadership on this issue, Obama himself wants them to get back to talks.

The president at his press conference today was very adamant about coming back and talking, but also telling the Republicans straight out that they have to start taking some of their sacred cows off the table, like taxing the rich,” said Ricardo Young.

It is important to remember, however, that the debt talks are still about politics, believes Young.

When you look at this issue, as grave as it is, many believe the Republicans are still using it as a political tool to make it look like President Barack Obama isn’t leading, but he is the one who caused the problem,” said Young.

However, the US cannot afford to default on its debt, and the two parties are likely to come to some solution before August 4, Young told RT.

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