It's not him..its the government!
who agrees? 
I agree. It is a government that feels that it can spend money without regard to whether it should be spending that money or how it plans to pay for that spending. Whether that is because of a massive prescription drug program from the previous administration, a business-unfriendly energy plan of the current administration, or increased military spending by both administrations, government as a whole has just been spending
our money recklessly.
The 8/2 deadline is not as bad as an actual default.... The government still takes in more money than it owes to its creditors; it just would mean that the treasury would have to prioritize whether to pay towards our debts or to pay other expenses without going above our current debt ceiling. A true default, on the other hand, is when the government cannot pay towards their debts let alone towards any other expenses. When the crediting agencies are warning about lowering our credit rating, it doesn't necessarily mean that we need to increase this debt-limit; if the treasury chooses to default on some loans in place of not paying other obligations, then the agency may lower our rating because of the strategic default. But the agencies are more concerned about the way the government is handling its finances as a whole. The chairman of the S&P made an announcement today indicating that this is the idea behind the warnings that we've been hearing lately. Even if we increase the debt limit but do nothing to curb our spending, the debt will continue to increase and the financial status of our country will continue to go downhill. It is this that the lending agencies are most worried about.
To help make this make sense, just think about your own credit score... Let's say that you had racked up a bunch of debt: a house mortgage, car payments, student loans, credit cards, etc. As long as you continue to pay towards these debts, your rating won't go down. However what happens if you start to incur a deficit in your finances; you have to take an unpaid leave of absence from work to deal with a death in your family. You may still have enough money to cover all of your debt (and thus wouldn't have to default on your loans), but you have other obligations that you also need to cover (eg food, gas, cable, other utilities, etc.) You may then need to get another loan to help with the short-term financial problems: take out a personal loan, get a second mortgage, ask for an increase in the credit limit of your current credit cards. This is how us people increase our debt limit. Now doing such an increase may put a small hit on your credit score, but as long as this is just a temporary deficit, it won't hurt you too much. But lets say that your deficit is incurred by spending more than you can afford: you go out to eat for all of your meals, you get a mortgage for a mansion, you party at the nightclubs, etc. And you continue to ask for debt-limit increases (again either by additional loans or by increasing the limits on the loans you currently have). Eventually the bank or credit card will look at your deficit spending and will drop your credit score as a result; even if you are somehow able to pay towards the debt you hold, your reckless spending will cause credit agencies to begin questioning whether you'll be able to do so in the future and thus will lower your credit rating as a result. When that happens you have to start seriously looking at your own spending habits and cut back on the wasteful spending, or go broke by defaulting on your loans.
Community Forum
Topic: Who else thinks obama is destroying our country ?? (Read 7013 times)
April 07, 2010, 08:41:23 am
