In recent news, President of the united stated Joe Biden abruptly cancelled his trip to Australia despite promising to address the Australian parliament for the first time in 10 years. This may not sound shocking or even relevant, but it could be very important to the Australian economy. 

Anthony Albanese received a call at 4.30am this week with the news Biden has to go home in order to meet with his congressional leaders. So why does he need to meet with them so urgently?

In the United States has a policy called a ‘federal debt ceiling’ simply stopping them from borrowing excessive amounts of money, this ceiling can be raised and in fact has been 78 times in 1960. The only thing stopping them is their current congressional leaders, which are republican and are refusing to increasing these ceilings until they agree to terms they have decided. 

If they don’t successfully increase the ceiling, and ‘default on their obligations’  it could symbolise the worlds benchmark for credit worthiness and push the US into a financial crisis and recession. 

So, what does this mean to Australia?

Chris Picton stated it would absolutely be felt in Australia by flow-on effects through the global financial market.