US Would Be First Major Western Nation to Default Since Nazi Germany

The United States is in danger of becoming the first major Western country to default on its debts since Nazi Germany ceased payments in 1933.

If no action is taken by Thursday, President Barack Obama would join the then-newly installed chancellor Adolf Hitler as the man who led the country when it failed to make payments, Bloomberg notes.

Hitler had been in power just three months when his country defaulted.

The debt-ceiling battle has become a perennial political standoff in Washington, where Republicans hold out for spending cuts to balance the budget and Democrats argue for no strings attached to a debt increase deal.

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But this round of political brinkmanship comes amid a government shutdown, where House lawmakers and Obama are distracted over a standoff sparked from Republicans' refusal to fund the president's signature healthcare program.

The Senate on Saturday tried to pass a bill to raise the debt ceiling, but it was rejected along party lines with Republicans arguing the deal would increase spending and violate the sequester.

"Each hour that goes by, we’re closer to a calamity for our country," said Senate Majority Leader Harry Reid.

The Bloomberg report also suggested that failure to meet Thursday's deadline would lay waste to stock markets from Brazil to Switzerland, jeopardize the dollar's role as the world's currency, and send world economies into a recession or depression.

"These are generally catastrophic economic events," said Professor Eugene White, an economics historian at Rutgers University. "There is no happy ending."

Though Germany's default 80-years ago was the most recent by a major Western country, it is not the only one. The Bloomberg report also detailed how excessive debt led to civil war after England's Edward III refused to pay his obligations in 1339, and how the debt default in France lead to the 1789 Revolution.

Germany and France have each defaulted eight times since 1800, while Argentina has failed five times since 1951 to meet its obligations and bondholders are still trying to recoup their money.

The U.S. government had $36.5 billion cash on hand as of Thursday, but without approval from Congress for the authority to increase emergency borrowing, the Treasury says the U.S. will run out of money to pay its debts on Oct. 17.

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