A woman walks past the National Debt Clock in New York, the United States, on June 1, 2023. (Xinhua/Li Rui)
"Whoever is in power accuses the opposition of running the country into the ground." The latest U.S. debt-ceiling drama has again exposed the deficiency of the country's two-party system.
ISTANBUL, June 12 (Xinhua) -- The latest U.S. debt-ceiling drama has exposed the deficiency of the country's two-party system, a Turkish analyst has said.
"Whoever is in power accuses the opposition of running the country into the ground. If you look at the opposition, they accuse the government of irresponsible or inefficient spending," Sant Manukyan, an analyst with Is Yatirim, the investment banking arm of Isbank Group in Istanbul, told Xinhua in a recent interview.
"But of course, since it is a two-party system, everyone knows that the other side will be in the same situation after one or two terms," he said.
Therefore, there is quarrelling until the last moment, but in the end, common sense prevails, and somehow the two political parties reach an agreement, the analyst said.
U.S. President Joe Biden signed the Fiscal Responsibility Act of 2023 on June 3. The bipartisan legislation suspends the public debt limit through Jan. 1, 2025, and increases the limit to the actual debt level a day after, on Jan. 2, 2025.
Manukyan warned of the consequences of not paying the debt.
"The main risk of default here would be a collapse of the collateral market, which would, in turn, affect the real sector and bring the global economy to a standstill," he said.
"We had a repo crisis in 2019, with the rapid decline in bank reserves. There could be similar pressures," the expert said, recalling the 2019 repo blast that sent markets into a tailspin. The crisis forced the Fed to pump billions of dollars of emergency funds into the financial system.
"But the Fed, having learned from what happened then, has put in place new practices. So I think the possibility of a market crisis is very low at the moment," Manukyan added.
Meanwhile, Manukyan stressed that due to the dollar's hegemony in global markets, the slightest fluctuation in the U.S. economy has a massive impact, especially on developing countries.■
