It’s 7:42 a.m. on Tues­day, August 2nd, 2011.  Work­ing from home today, and into my cof­fee by 3/4 of a cup.  Today is the day our gov­ern­ment votes on the debt ceil­ing.  I have not had much time to research the way I would ulti­mate­ly like to, how­ev­er, here is my pre­dic­tion based on some of my own research.

  1. What is the debt ceil­ing for?  It is to lim­it law­mak­ers spend­ing.  We can see it works, huh.  Obvi­ous­ly not.  I am per­son­al­ly won­der­ing what the use is of being able to raise your own cred­it lim­it?
  2. We have to raise the debt ceil­ing because there are two oth­er options:  Default on finan­cial oblig­a­tions as a coun­try or raise tax­es by bil­lions (sev­er­al hun­dred bil­lions) of dol­lars.  Both are real­ly bad.  Here is why.  First, rais­ing tax­es by hun­dreds of bil­lions of dol­lars will put mar­kets around the world in the toi­let for a mul­ti­tude of rea­sons, not to men­tion the fact that it will spi­ral an already crip­pled U.S. econ­o­my into a depres­sion, if we are not already there.  Peo­ple already have stopped spend­ing, and are being more cau­tious.  Imag­ine if your tax­es hit 60% not unlike Ger­many?
  3. Default­ing on finan­cial oblig­a­tions, hmmm…  I won­der what would hap­pen if every­one stopped lend­ing us mon­ey after default­ing on loans.  What would that do to the econ­o­my?  What would that do for the gov­ern­ment?  What would that do to the mar­kets?  I have per­son­al­ly had cred­it card issues in the past and know what it is like to “try to catch up.”  Imag­ine our coun­try hav­ing to dou­ble up on pay­ments on oblig­a­tions to Chi­na to catch up?  Seri­ous­ly?  Again, detri­men­tal to investors and our econ­o­my.  This is again high risk, hurt­ing the US econ­o­my dra­mat­i­cal­ly.
  4. What if we just cut spend­ing?  Not sure that is going to hap­pen either.  Cut­ting spend­ing puts more peo­ple out of jobs, and bud­gets have to be re-eval­u­at­ed.  If not done right, from every­thing I have read, the gov­ern­ment may not have the funds to make it to the end of our fis­cal year.  At least that is the argu­ment.  While I don’t agree with this assess­ment, I am not a finan­cial expert.  In fact, I may be a lit­tle con­fused.
Now, reach­ing the debt ceil­ing today, or let me rephrase, reach­ing our gov­ern­men­t’s cred­it lim­it today, will not tech­ni­cal­ly shut the gov­ern­ment down.  Although, maybe it should.  Maybe it should close and lock the doors and spi­ral us into a finan­cial obliv­ion.  This isn’t some roman­tic “get the exist­ing incum­bents out dream.” I know that sounds harsh, but I am not con­fi­dent that they are going to come up with a good or right solu­tion.  This may need to be done to actu­al­ly take action on bal­anc­ing our nation­al bud­get.  Con­gress’s bor­row­ing pow­er needs to be lim­it­ed going for­ward.  To that end, in the next four hours, if our gov­ern­ment decides not to raise the debt ceil­ing, and cut costs, gov­ern­ment may be forced to par­tial­ly shut down.
Unfor­tu­nate­ly, I think there is no right answer for any of us.  There are reper­cus­sions for the com­mon per­son like you and I no mat­ter what deci­sions they make.  I am just not sure I trust them to make the right deci­sion…
By the time you read this, a vote will have been cast, and we will be spec­u­lat­ing about the fate of our nation, finan­cial well being for fam­i­ly, friends, and future. I hope it is pos­i­tive for all of us.

This video added at the end of the day, post vote

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