August 2nd, 2011 • No Comments
The United States may have averted imminent crisis today, but the future still does not look bright for the world power.
The bill signed on August 2nd raised the debt limit $2.4 trillion dollars, which should be enough to last the country until 2013. It also cut spending $2.1 trillion in the next 10 years. $900 billion of the cuts were decided in this bill. A 12-member committee was also created to come up with $1.5 trillion more in cuts over the same time period. If the panel cannot come up with at least $1.2 trillion in cuts then spending cuts would happen all across the U.S. budget, targeting things like the Pentagon, domestic agencies, farm subsidies, and payments to doctors and other Medicare providers. However much the committee comes up with in cuts the same amount would be added to the debt ceiling. This all came without imposing any new taxes, a key Republican demand. This was a success for the Tea Party movement, and a complete failure for the Democrats. Continue reading ‘America Avoids Default But for How Long?.’
July 22nd, 2011 • No Comments
The countdown is on until the United States defaults on its national debt. Just 11 days remain before the deadline to raise the debt ceiling for the country. If it is not raised the United States will be forced to default on its $14 trillion deficit on the August 2nd deadline. The issue has arisen after the Republican Party has decided to hold the vote hostage to force Obama to bend to some of their demands. Continue reading ‘The Countdown is On.’
July 18th, 2011 • No Comments
With gold at a record $1602 an ounce, there is little doubt that the world has lost faith in the global economy. The United States has still not reached a deal to raise its debt ceiling, which may lead to a default on loan payments come August 2nd. The crisis stems from the fact that the United States is one of the few countries that has a statutory limit on its national debt. This creates periods of uncertainty where it is not known if the government will be able to meet its financial obligations. Continue reading ‘Gold Rallies as America’s Debt Crisis Reaches Standstill.’
June 13th, 2011 • No Comments
Standard & Poor’s has downgraded the Greek economy to a rating of CCC from B, the lowest possible. They believe that there will likely be one or defaults on the failing country’s national loans. “Risks for the implementation of Greece’s EU/IMF borrowing program are rising, given Greece’s increased financing needs and ongoing internal political disagreements surrounding the policy conditions required,” said S&P in a statement.
No other sovereign nation has as low a rating as Greece does, and only Ecuador has a worse rating. This comes after Obama has pressed Germany to structure a new bailout for Greece. It is possible that the economy could be downgraded to an ‘SD’, or selective default, if Greece has to take on a debt restructuring or a maturity extension on terms that constitutes a distressed debt exchange. This whole issue has arisen because of a failure of the Greek government to accurately portray the national debt and a slow as a result of economic recession.
S&P has said they would rather have Greece refinance their debt than using a bond swap or extended maturity on bonds as a method of debt management. The outlook is also negative, with the distinct possibility that there will be another downgrade coming in the next 12 to 18 months. Greece has made statements to the effect that they feel that S&P has overlooked all of the EU/IMF deliberations that are currently going on to figure out a way out of the intense clusterfuck of the Greek economic crisis.
Read more about Greece’s economic troubles here.