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Financial markets at risk by political crisis in the U.S.

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USA Paralized After Political Disputes

U.S. is in a crisis that paralyzed the government in a process called "shutdown".
 
President Barack Obama was meeting with congressional Democrats and Republicans to find an agreement without achieving progress. Obama refuses to negotiate with Republicans.
 
The White House issued a statement that said Obama hopes "common sense will prevail" in the negotiations.
 
On Monday at midnight began the "shutdown" after the disagreement between the Republicans and Democrats over government operations.

This surprising measure paralyzed dangerously the state agencies,  and convert the budget subject in a big political pulse.
 
Republicans strongly oppose the health care reform measures in the country, while Obama prefers to reform the health system and gain voters, raising the national debt.
 
This intense political debate tests the control ability of Obama, who faces another tough battle to raise the debt limit before time runs out in the coming weeks.
 
This debate could bring the U.S. to the brink of default, although it is a highly unlikely scenario.
 
The gravity of the situation forced Obama to cut his trip to Asia. The President will depart on Saturday and return a week later.
 
In the busy schedule of the President, Obama made a recess to meet with business leaders, who were concerned about the extent of this crisis.
 
The head of Goldman Sachs, after the meeting said: "There is a precedent for the government shutdown. There is no precedent for a default. We are the world's largest economy. We are the world's reserve currency. "
 
With these statements it is clear that there is no place to disagreements on the debt ceiling.
 
In this fierce political infighting there are several issues that are mixed: who has control over the U.S. debt?  How will the U.S. finance its government in the future? What will happen to U.S. debt? Will it be possible to resolve political disputes on the budget in the future without creating a constitutional crisis?
 
If there is no clear way to resolve this dispute, for Obama will be very difficult to rule in the future if he face such conflicts again.
 
Meanwhile the Republicans play politics playing a dangerous game, use key votes to extract concessions and negotiate power with the Democrats, but this could cause a negative effect on the party's image.
 
Meanwhile Democrats continue to press and blame the Republicans for the paralysis.
 
The American people are impatient. In the surveys both parties are  blamedfor the failure in negotiations, and could have repercussions in the future if the "shutdown" continues.

Europe Recover the Rhythm

Meanwhile in Europe things continue in the same positive way of the recent weeks.
 
The European Central Bank kept applying the old saying: "If it works do not change it".
 
Instead of lowering rates, as mentioned their officials on numerous occasions, the ECB kept interest rates unchanged hoping to continue the recovery in the euro zone.
 
Mario Draghi, the ECB chief said once again that the entity maintain an expansionary stance as long as necessary, in the face of weak economic outlook.
 
The ECB meanwhile plays with market interest rates, which had risen by the prospect that the U.S. Federal Reserve cut its own stimulus.
 
The idea of the ECB is to bring these rates down  through an expansionary policy which is not as severe as the U.S. policy. This had not taken effect until the Fed announced the postponement in the cuts of stimuli.
 
In general, the euro zone economy is following the predictions of the ECB, with a slight recovery without force.
 
Inflation is well controlled at 1.1 which gives support for the ECB to maintain its expansionary policy.
 
Meanwhile the underlying problems remain unresolved. Italy is in a political crisis stemming from economic fragility. And Greece dances again in the balance as the economy continues to contract.
 

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