How To Solve The U.S. Debt Crisis

Image via WikipediaThe United States debt crisis continues along a path that could lead to not only financial ruin for the U.S.  But also create a world wide financial crisis. Already the PIIGS (Portugal, Ireland, Italy Greece and Spain) are in financial distress. The addition of the United States to this group could have severe consequences.
So what is the problem? The Republican Party and the Democratic Party are engaged in  a classic partisan gamemanship. The Republicans want to reduce the deficit by reducing spending and no tax increases. The Democrats prefer tax increases but are willing to reduce spending on many social issues in order to make a deal. The Republicans however, as previously stated in one of The Hoss’  earlier blogs, are the party of no. They, at least to this point in time, are not willing to compromise, no tax increase period. In other words the rich get richer and the poor get poorer.
The Hoss, during his research as come across a very interesting paper by Stephen R. Richardson which details the causes that led up to this crisis and provides a logical well thought out course of action that could ease the United States out of its current dilemma and eventual financial stability. Here is the link to this great paper How To Solve The U.S. Debt Crisis.


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Consequences of a US Default on Debt Payments

Image by cliff1066™ via FlickrWhat will be the Consequences of a US Default on Debt Payments?

The failure of Democrats and Republicans to resolve the US cash flow problem could result in serious consequences to all American’s and negatively effect world wide economics.

The US government will be unable to fulfill its financial obligations. Creditors (ie bond holders) would not receive payment resulting in a down grading of the US credit rating. Therefore, mortgage rates would rise, and home owners would see an increase in their monthly payments. People with car loans or any loan will have to find more funds to meet their commitments.

This may be difficult for those on military salaries, social security or unemployment as these payments from the government will, in all likelihood, be delayed.

In addition, money for infrastructure repairs and improvements and education may be reduced resulting in construction and educational job losses.

What about those on Medicare, will they be left to fend for themselves?

Stock markets will, in all probability, suffer serious declines. Those fortunate enough to have 401ks will see those decline in value, disrupting their future retirement plans.

No doubt the US dollar will decline in value. This would have a positive effect for export business but an increase in the cost of borrowing would offset any such benefit.

In short it is time for the politicians to stop playing at politics and start working together towards finding a solution to this very serious economic crisis.



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Speaker Boehner Won't Play Ball

The Hoss has been in the stable since Sept. 2010 due to heart problems. This is why there have been no postings to Hoss Cents Free Financial Money Magazine. The good news is the two stents placed in the old ticker seem to have resolved the Issue
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Can anyone out there believe the nonsense going on in Washington D.C.? What is with these politicians? They seem more interested in running for re-election rather than running the country. The GOP lead by House Speaker Boehner decided to walk out on negotiations designed at cutting the US federal deficit. This reminds me of the little boy who comes to play a game, brings his own baseball and when things are not going the way he wants them to, he takes his ball and goes home. Childish is the word that best describes Speaker Boehner. Does he not realize the serious financial implications that could befall the American people if some sort of agreement is not reached?  At least President Obama is willing to negotiate and offer real comprises towards a solution to the US Financial problem.

Let’s hope that this financial mess is straightened out before America is trust into a default position. The ramifications of a US default will be felt world wide and could precipitate a world wide recession or even depression. Why? Because speaker Boehner took his ball and went home. Time for the GOP to grow up.


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