The Boehner Shock
Ever since the financial crisis erupted in 2008, media outlets and specialists alike have devoted much attention to anticipating negative shocks to the global economy. The surprise resignation of US House Speaker John Boehner could be particularly disruptive to the extent that it heightens the risk of another US government shutdown.
WASHINGTON, DC – Ever since the financial crisis erupted in 2008, media outlets and specialists alike have devoted much attention to anticipating negative shocks to the global economy. Today the focus is on the state of the Chinese economy, the timing of the US Federal Reserve’s normalization of interest rates, and the various policies under discussion in the United States’ presidential election campaign.
But the most damaging shocks often hide in plain sight – and then hit precisely when and where almost everyone thought stability would prevail. One such risk is that political partisanship will cause another disruption to the US federal government’s finances, weakening the American economy and roiling world financial markets.
This warning may seem strange. After all, the last big partisan fight (in 2013) over funding the government and raising the debt limit gained little for the Republicans who instigated it – other than significant damage to their reputation for responsibility. And the current Republican leadership, eager to strengthen their party’s electoral chances in 2016, very much wants to project an image of sober good sense.