US averts default but not trust deficit

Shortly after the US Senate voted on Wednesday night to end the 16-day part shutdown of the federal government by raising its debt ceiling, President Barack Obama said there was a lot of work to be done, including the need to earn back the trust of the American people.

That is indeed true. Recent Gallup and Pew Research Center polls show that the American public's confidence in the Obama administration, the Congress and the US economy has nose-dived since the latest political and financial stalemate in Washington began. But Obama failed to even mention that the US should also try to win back the trust of the people around the world, especially if the US still wants to maintain its global leadership.

Senator John McCain (R-AZ) talks to reporters in the US Capitol in Washington October 16, 2013. Senate Democratic leader Harry Reid and Senate Republican leader Mitch McConnell agreed to raise the US debt limit and end the government shutdown. [Photo/Agencies]

At the joint annual meeting in Washington last week, World Bank President Jim Yong Kim and International Monetary Fund Managing Director Christine Lagarde both had warned the US of the disastrous consequences of a possible debt default. And in a statement, finance ministers and central bankers representing the world's top 20 economies had urged the US to take urgent action to address short-term fiscal uncertainties.

In fact, the part shutdown of the US government and the raising of its debt limit had become such a pressing topic at some seminars that serious discussions on the global economic recovery and other matters were put on the backburner. Some moderators even vowed to ensure that their seminars were not hijacked by a debate over the US debt ceiling and government shutdown. But that often proved a difficult task given the clout of world's largest economy.

The political farce staged in Washington has hurt the US' standing in the world, as Obama also admitted in his Thursday speech. Countries such as China and Japan, the two largest holders of US Treasuries, have every reason to complain that Washington has been playing an irresponsible game by putting their assets at risk.