Nobody really knows whats going to happen if we hit our Debt Ceiling, as that has never happened. It appears they will just extend the Debt Ceiling till Thanksgiving. The people shutting down the Govt, is Harry Reid and the President, the House has already presented several bills to balance the budget. If the Debt Ceiling was hit and was not resolved, your daily normal lives will be severely affected. What would the economic impact of all this? No longer able to borrow, the government could spend only from its revenue from taxes and fees. This would force an immediate spending cut of 32 percent, the Bipartisan Policy Center estimates. If the debt limit wasnt raised through November, Goldman Sachs estimates that government spending would be cut $175 billion. Thats equivalent to about 1 percent of the economy. On top of that, stock markets would likely fall. Household wealth would shrink. Consumer confidence could plunge. Americans would cut back on spending. Higher rates on government debt would raise other borrowing costs, including mortgage rates. Why is it potentially catastrophic for the government to miss a payment on its debt and default? In part because the repercussions would be felt worldwide by a global economy that still isnt at full health. Banks in the United States and overseas use Treasurys as collateral when they borrow from each other. If Treasurys were no longer seen as risk-free, it would disrupt borrowing and jolt credit markets. A financial crisis like the one in 2008 could follow. Banks also hold much of their capital reserves in Treasurys. If they fell in value after a default, banks would have to cut back on lending. A default is an unacceptable event, says Judd Gregg, CEO of SIFMA, a Wall Street lobbying group, and a former Republican senator. It will have an incredibly negative effect on the markets and ...everyday Americans.
Posted on: Tue, 15 Oct 2013 22:46:45 +0000
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