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Whether the answers to these very tricky notes of interrogation would be an emphatic “Yes” or “No”, nobody knows. But this issue has certainly been raised for the first time since the end of World War II due to the debt crisis in USA. The situation also warns of the return of the ‘Black Tuesday’ of the Great Depression which began on October 29th, 1929.

The Great Depression, an example of how far the world’s economy can decline, originated in the USA after Wall Street suddenly crashed. It hit the entire world.

Is ‘BLACK TUESDAY’ Going to Strike Back? ‘De-Americanize the World’ - Chinese Recipe For US Crisis Is it time to ‘de-Americanize’ the world? Is ‘Black Tuesday’ coming after 84-long years?

The Federal Government in USA had been in partial shutdown since Congress missed a 1st October deadline to pass a budget. This situation occurred as the politicians were not able to agree on funding for current spending resulting in lakhs of federal employees being sent home and government offices closed. The Republicans did not approve the new budget and said unless President Barak Obama agreed to delay or eliminate the funding of the healthcare reform law of 2010, they will not

change their stand. Subsequently, the US Treasury had been using extraordinary measures to keep paying the bills. However all these measures have run out on the 17th of October, 2013.

Fact File Genesis of the Crisis The present crisis emanated out of an ongoing political debate in the US Congress about: National Debt Debt Ceiling In January 2013, the American Taxpayer Relief Act, 2012 was passed by the Obama Government to avoid the projected fiscal troubles. Soon the political debate shifted to the debt ceiling. The ceiling is a limit fixed by the US Congress on the amount that the Federal Government can borrow for public spending. On December 31st 2012, this ceiling was touched. As a result,the Treasury Department took extraordinary measures to allow government spending to continue. If the US Government fails to enhance its debt ceiling immediately, it would have only $30 billion to continue to spend its bills, plus incoming revenue. Delays in raising this limit or ceiling would directly mean a formal review of the US’ credit rating. In other words, US credit rating has the danger of being downgraded if everything is not set right immediately. Fear of ‘Black Tuesday’ started looming large on October 1, 2013 as Washington went into a partial shutdown on that day. As a result, 800,000 employees of the Federal Government were put on temporary leave.

Now what is to be done? The US Treasury, every week, also has to refinance $100 billion worth of debt in the form of US government bonds known as treasuries. The Federal Government also has to pay interest on its huge debt burden. If Washington fails to pay that interest, or pay back debt if required, it would put the US into default. Any missed payment would trigger a default and financial markets would sink. Naturally, the fear of a ‘Black Tuesday’ again has started looming large. Already, there are signs of growing fears in financial markets.

It is of no wonder then that official Chinese news agency Xinhua coined a very new term – ‘de-Americanize’ the world. Xinhua said that American politicians are “gambling the US future on their political-struggle interests.” China is the largest debt holder of USA.

Washington’s second-largest debt holder Japan too has said that Xinhua said but not after mincing words - “The US must avoid a situation where it cannot pay.”

FACT FILE What if the Debt Ceiling is Not Raised? Federal Government by law will not be able to add to the national debt Washington has to rely only on incoming revenue and about $30 billion in cash to pay the nation’s many obligations. This money also would vanish within few days if the debt ceiling is not raised USA could miss a $12 billion payment due to its Social Security pension program The US economy will start sinking The government will have to cut down spending by about a third from one day to the next Government doctors treating the poor could go unpaid Soldiers would not get salaries in time US Government spending would fall across the country/world Spending cuts could suck the equivalent of about 4 percent of national output out of the economy The value of US government debt could be called into question The spending cuts and a severe credit crunch could cost more than 3 million jobs in America over the next year or so and push the jobless rate to nearly 9 percent

If we pay serious attention to the term ‘de-Americanization’ of the world, it would directly mean: move away from the US dollar or don’t consider the dollar as the key currency. If the US debt default happens, China, Japan and almost all countries across the world, including India, would face great risks in their dollar - denominated assets. The prices of gold would also surrender to volatility.

Amlan Home Chowdhury