The most important issue facing the U.S. today is dealing with the national debt limit. Its ceiling is being reached. It must be paid. Failure to do so will, not may, result in economic disaster the likes of apparently not comprehended by Congressional Republicans nor the American people.
Default will make 1929 pale in comparison.
There have been a number of articles written this past week setting forth the consequences of a default. One of the best is that published in the New York Times 1/13 titled “The U.S. May Finally Breach The Debt Ceiling. Here’s Why That Would Be Very Bad.”
I am analyzing the problem in a two fold fashion, as the New York Times did.
Just approaching the debt limit can hurt the economy. It happened in 2011. Congressional Republicans and Obama engaged in a standoff. It was resolved just in time to actually avoid hitting the limit.
The result nevertheless had dire consequences. Coming close rattled investors, consumers and business owners. Stock prices plunged. Markets became volatile. It took the economy a half year to recover.
Interest rates rose. Mortgage rates jumped substantially. Home buying died.
The S&P downgraded the U.S.’ credit rating for the first time.
Consumer confidence and small business optimism plunged.
Note, all these things occurred where no default occurred. One came close, but only close.
The economy will have far worse consequences if the U.S. fails to pay the debt and a breach occurs.
Investors would demand higher interest rates on U.S. borrowing. Interest payments would rise dramatically.
The stock market would nose dive. Employee invest plans drop dramatically.
International bond markets would destabilize. U.S. Treasury bonds would no longer be seen as one of the safest investments in the world.
The U.S. would not be able to pay the salaries of federal employees.
Social Security checks would not go out.
Ten percent of the American economy would be killed immediately.
Three million jobs would be lost.
A 30 year mortgage would increase by an additional $130,000.
And finally, the national debt. Republicans are preaching how high it is and they intend to reduce it. Well, a default in meeting the pay the nation’s one year of bills would automatically result in $850 billion being added on to the national debt.
Congressional Republicans are balancing an economic nuclear bomb on their fingertips by playing the game they are. I cannot help but wonder if they actually know what they are doing.
Last night not Tom Brady’s time. The Cowboys beat the Bucs 31-14.
Brady did not play his usual game. One of the worst playoff games in his 23 year career.
Brady is 46. Time to pack it in. Retire.
He will still be recognized as the greatest professional quarterback in history. Perhaps the greatest professional pro football player ever.
Syracuse lost to Miami last night 82-78. Too bad. It would have been Syracuse’s biggest win of the season. Miami is ranked #17.
Syracuse fell short in the last minute of the game. Mintz made a “freshman mistake” and what might have been a win became a sure loss.
Such is life!
The South continues to fight the Civil War. Assholes one and all.
Martin Luther King Jr. is a federal holiday. Mississippi and Louisiana cannot let go their Confederate spirit. They celebrate the same day honoring Robert E. Lee. Both States refer to the day as King-Lee Day.
Virginia did the same till 2000. Arizona till 2018.
An icon and diva of the American and Italian cinema died yesterday. Gina Lollobrigida. She was 95.
On this day in 1961, President Eisenhower delivered his farewell address. In it, he warned against the “military-industrial complex.”
Over the years, his words have gone unheeded. Now, the complex is too big to control. We’re stuck with it.
Enjoy your day!