A curiously detached Hussein Obama seems to have little interest in the rapidly approaching US D-Day (D for default). He has made a half-hearted call for the Democrats and Republicans to get together and help clear up his mess and he has encouraged US troops in war zones by informing them that they wont be paid – lets hope there is enough in the Treasury to pay for bodybags to be flown home.
The US economy has had some ups and downs over the last decade or so.
Under Clinton, national debt rose and then showed a minor fall at the end of his Presidency.
Under Bush Junior, national debt fell and then steadily rose, pushed up by the banking crisis.
Under Obama the national debt has just gone up at an amazing rate as he has tried to spend his way into a second term.
In the US, there is a cap on how much can be borrowed. That cap has been reached and a pile of interest has to be paid on Tuesday/Wednesday. If the debt is not increased, US public officials and troops will not be paid. It is hoped, but by no means certain, that Medicare and benefits payments can still be made to the most vulnerable in US society for perhaps a few weeks.
The hope is that by Wednesday, the US Treasury will be able to scrape together enough funds to buy a few more days, although a technical default will have occurred on Wednesday, if not a full default, unless Congress agrees to an increase in borrowing.
This is a potential disaster that Obama must have been aware of for at least eighteen months. He seems to have turned a blind eye and hoped for a miracle to allow him to keep spending up to election day. He may have hoped he could put all the blame on the Republicans by engineering a situation where they either unconditionally surrendered to him or prevented an increase in borrowing being agreed.
It would be fair to say that Democrats and Republicans at the extremes of their respective Parties have not helped the situation and it is also fair to say that neither Democrats or Republicans have been prepared to reach a compromise in the national interest. However, the US has an Executive President and he is responsible for putting forward policies, leading the nation and winning support from Congress.
The current serious danger has been caused because Obama has failed as a President and although markets hope that a deal will be struck at the eleventh hour it is looking increasingly likely that there will be no deal because there is no effective President in office to lead the Congress.