There are several reasons that GNN hasn’t discussed the United States’ failure thus far to raise its $14.3-trillion debt ceiling.
Despite the shameful political posturing that has gone along with this crisis in the making, the Aug. 2 deadline has seemed so far away, but now, we’re talking Tuesday and, as of this writing, the Republicans and Democrats still seem more interested in taking shots at one another than fixing the problem.
The assumption is that saner heads will prevail, so from the perspective of the golf business, there have been matters within the industry that, at the time, were more important than what was happening in Washington, but with the deadline so close and politicians playing chicken, golf and all businesses should at least be paying attention.
A lot could happen between now and Tuesday and that means a resolution, but if it doesn’t happen, a lot could happen after the deadline passes and it won’t be pretty. Of course, Americans will be hit hard, but the fallout will not be limited to the United States.
In the United States., a default will mean that the government may not be able to pay social security, its military and interest on its debt, among other things. Spending will trickle to a halt, not exactly something that will improve the situation in an already struggling American economy.
However, those outside of U.S. borders cannot be complacent about the ripple effect swamping them, particularly in businesses that rely on disposable income, such as golf.
Certainly in Canada, we like to crow about being in better financial shape, but market turmoil and a soaring this week are early indicators of what’s ahead should the U.S. default. Not only will the rise in the Canuck buck mean less tourism, but it will also hit Canadians who do business with our largest trading partner.
In all of the turmoil that followed such an event, jobs could be lost and investments and retirement savings could be affected, leading to people pulling back on their spending. That may just be the start as the effects are felt around a world that is already going through a debt crisis in Europe.
However, governments in the U.S. aren’t much different here in their desire to grandstand, but each day that they carry on creates more uncertainty in their own country and around the world. That leads to consumers reining in spending and businesses hurting in the name of theatrics.
If the curtain doesn’t come down on this theatre of the absurd by Tuesday, the problems multiply, but to what degree, nobody seems sure. The only thing we can be sure of is that we won’t like it.
There isn’t much you can do about it except be aware. As much as politicians outside the U.S. may say they can deal with the problem, they’re likely blowing smoke because such an occurrence is unprecedented in respect to the world’s largest economy, so they’ll be going in blindfolded.
The best thing we can hope for is that that politicians do the unthinkable and put their own self-interests aside to resolve this situation, making this blog a waste of time.
I still believe that’s what will happen, only because the potential consequences mean there is no upside for even those who are motivated by personal advancement.