US shutdown fears - Telegraph The US shutdown has not been a proud moment for the country. Political warfare between the Republicans and Democrats - culminating in the rejection of a Republican spending Bill - has caused 800,000 federal employees to be sent home, parks and memorials to close and even military death benefits to be suspended. So far, there has been an estimated $1.6 billion lost in economic output, although the impact is not limited to the balance sheet. Barack Obama's decision not to attend two summits in Asia suggests that the shutdown is doing damage to America's position as a superpower, too. The Chinese media have treated it as an act of economic sabotage. The People's Daily said that America was using "its domestic policy to kidnap the global economy." That might be the propaganda machine talking, but China has legitimate fears about America defaulting on its debt should its partisanship extend to a failure to lift the debt ceiling - something that would be painful for the People's Republic, which holds $1.28 trillion in US Treasury securities. Indeed, the results would be disastrous for us all: the value of the dollar would fall, the stock market would slump, banks that own government-backed debt would suffer, and a likely American recession would spread like a cancer throughout the world. There are glimmers of hope, and the emergence yesterday of a Republican offer to lift the debt ceiling for a little while longer to give everyone space in which to talk is welcome. What the world has to pray for is that cooler heads prevail, and that from this traumatic confrontation there comes an awareness of the need for a grand agreement afterwards. America has to avoid yet again coming close to default, and what Treasury Secretary Jacob Lew described as wreaking "irrevocable damage to the world economy."