BANGKOK: Imagine if the Temple of the Emerald Buddha or the Eiffel Tower was closed to visitors because of a government shutdown. If I were a first-time visitor to Bangkok or Paris, that would be a horrendous experience.

Visitors to New York in the past two weeks have felt the same way as the Statue of Liberty, a key landmark in the city, which welcomed nearly 4 million people in 2011 and generated US$174 million in economic activity, was off limits due to the government shutdown that started on Oct 1. The shutdown — the first in 17 years — has got global attention.

Investors in Thailand are closely monitoring the updates, particularly as US politicians are supposed to vote before Thursday on raising the debt ceiling. Without approval, the US will default for the first time in history and the repercussions on the global markets will be huge. Politicians drag their feet on the budget and disrupt the lives of federal employees. There’s a 50:50 chance that they won’t vote on the debt ceiling, unless President Barack Obama gives in on his healthcare scheme.

What will happen if the debt ceiling is not raised from its current $16.7 trillion? Ripples in the global financial markets will have an immediate impact, as about $2 trillion worth of US government bonds, so-called Treasuries, are being used as collateral for loans among financial institutions. A default would undermine trust in the US government and reduce the value of its bills.

It was not a surprise last week when Hong Kong, one of the world’s major financial centres, introduced some measures to cope with a possible default. The Hong Kong Exchange and Clearing (HKEx) raised the so-called haircut on Treasury bills that mature in less than a year from 1 per cent to 3 per cent. What this means is that these bills will be valued at 97 per cent rather than 99 per cent of their market value, when used as collateral for trades. Meanwhile, Hong Kong’s monetary authority has sent a memo to banks reminding them to be prepared in managing liquidity risks.

Among the long-term impacts will be the unwinding of exposure to US Treasuries among central banks. Of the combined foreign reserves that central banks around the world have built up, over half of the total $11 trillion is believed to be denominated in US dollars, and US Treasuries are a major portion of that. It remains to be seen what China will do with its $3 trillion in reserves, mostly held in the form of US dollars, in case of a default.

This nightmare is caused by US Republican politicians. They object to the budget and want the Obama administration to abort “Obamacare” — which requires all Americans to have health insurance. (Surprisingly, about 46 million Americans do not have health insurance — something financial gurus have been preaching about, as a tool against risk and a tool towards saving.) Obamacare remains the subject of negotiation as the debt ceiling deadline draws near.

What do the Republicans expect? That President Barack Obama withdraws the scheme, which was the centre of his presidential election campaign? Why can’t they wait to amend the scheme when they win control of the White House? US Secretary of State John Kerry said the battle erodes the credibility of the US. That is true, as its policy-makers — who preach to the rest of the world about better practices — are acting childishly.

As of press time, the possibility remained dim that American politicians would come to their senses, to avoid a sovereign debt default.

It would be ironic if any American politician visited Bangkok now and urged Thai politicians to end their deep divisions for the sake of the country. If politicians in the world’s most influential country can act like children, the bad behaviour of Thai politicians — from denouncing the house speaker, using threatening and derogatory words to wielding shoes in anger — could be excusable. Last week, our politicians were on their best behaviour when welcoming Chinese Premier Li Keqiang to the Parliament chamber. When this news was posted on the Facebook/Nationnews page, one comment was “No fight today”?

The Statue of Liberty was reopened on Sunday, as New York State agreed to shoulder a bill of about $61,600 a day. But the agreement is for reopening only through to Thursday. Further negotiations are planned. The US can’t disappoint the world. If it wants to maintain its status, its politicians must act accordingly. And hopefully, a return to common sense and orderly behaviour can inspire politicians elsewhere, including those in Thailand.

By arrangement with The Nation/ANN