On Thursday, the Treasury Department will have only cash on hand and any money coming in -- which varies day to day -- to pay the U.S. government's bills.
And the bills will exceed the revenue and cash at some point after that. So something will have to give. Someone, perhaps seniors due their Social Security payments, won't get paid on time. It's that simple.
In addition, the reaction in markets will likely be bad. The only question is how bad.
Stocks will probably plunge. The U.S. government's incredibly cheap
borrowing costs could jump. In a worst-case scenario, the gears of the
financial system could gum up because Treasury debt is such an important
lubricant.
Some economists fear a jobs-killing recession
if a debt ceiling crisis persists. That's because the effective result
of not raising the debt ceiling would be a massive and abrupt cut in
federal spending.
The only good news is that this latest Washington-made crisis has an
obvious on/off switch. It's not too late -- lawmakers can flip the "off"
switch now.
READ MORE: http://money.cnn.com/2013/10/13/news/economy/debt-ceiling-congress/index.html?hpt=hp_t1
No comments:
Post a Comment