Thursday, October 10, 2013

Blame Shifting

IMF warns that any US default on its debt obligations would imperil global economy. - Marjorie Olster

Reading Marjorie Olster's article, U.S. default would shake global economy?, three things caught my attention. The first one is the statement from Jose Vinals, IMF's financial counselor. Olster quoted him saying, " 'So let's hope that we never get there.' " He was referring to the negative impact of possible US default on global economy. In his mind, the global economy is already recovering and that unless the Republicans would listen to President Obama to stop the government shutdown, the end result would be a debt default that could terminate the ongoing recovery and revert the global economy to a far more serious crisis. That's how I understand Vinal's statement.

However, there are writers who don't believe that the global economy has already recovered from 2008 crisis. The owner of Monty Pelerin's World is just one of them. 

The second thing that caught my attention is the addition of the word "partial" to describe US government shutdown. During the first few days that I have been reading mainstream articles about US shutdown, I did not encounter such description. In fact, the impact of the news was too strong during its first appearance. I actually suspect, it was intentionally exaggerated to create an atmosphere of fear and anger. But it's now changing. It's more moderate now. What's the reason for the change? Is it not because they were not able to achieve their desired end?

The third thing that caught my attention is about US health care plan. For the Democrats, it was already a "settled law" and so the Republicans are waging an "undemocratic" strategy by connecting it to budget approval. I do not know why the Republicans resorted to such "tactic". Maybe they think that's the only way to protect the American people from financial danger caused by President Obama's health care program. 

So those are the three things that caught my attention. Concerning the article's title, though it is in question form, to me, it is a subtle way of implying big things in a smooth way. Instead of asking about the possibility of the negative impact of US default on global economy, I would rather ask, why US in the first place came to such point of default? I think looking for an answer to this question will get us nearer to what's really going on.

By sticking to the possibility of US default resulting from the Republicans "irrationality" would divert the attention of the public from the real issue. Instead of seeing that the existing situation was brought about by the action of the Federal Reserve, the blame is shifted to the Republicans, to the Tea Party movement, to Ron Paul himself, to Austrio-libertarian way of thinking, and then finally, to Mises, Hayek, and Rothbard.