There is an old joke that the foreigners should be allowed to vote in US presidential elections because the result matters so profoundly to the rest of the world. Worried global investors might now extend that idea to Congressional elections as well – as the US government shutdown shakes global markets, with the promise of far worse to come if Congress refuses to raise the debt ceiling in a couple of weeks time, and the American government defaults on its debts as a result.
For much of the rest of the world, America’s actions seem bafflingly illogical and self-harming. The reality, however, is that the Republican congressmen who have pushed this over the brink are not (by and large), crazy. It is just that their political incentives are now stacked towards confrontation with President Obama. Read more