With the Aug. 2 deadline looming, how concerned are you that the U.S. will go into default?
It’s in the headlines nonstop, but many New Yorkers don’t have a clue as to what the debt ceiling is and why it matters to them.
You should care – bigtime.
The debt ceiling, now at $14.3 trillion, is the maximum amount that the federal government can borrow. We will hit that limit on Aug. 2, unless the ceiling is raised.
“It is sort of like a limit on a credit card for an individual,” said Lawrence White, a professor of economics at New York University’s Stern School of Business.
If President Obama and Congress can not reach an agreement on the debt ceiling, the federal government will default on its debts and there could be harsh consequences.
Federal Reserve Chairman Ben Bernanke warned that failing to raise the debt limit in time to avoid default would end up making the federal deficit even bigger, damage the economy and “throw the financial system potentially into chaos.”
“The stock market will tank, which will damage everyone’s portfolio and/or pension fund,” White said.
That’s what happened when Congress initially failed to pass the TARP legislation in Oct.
Marriott Florida Beach Hotel Deals Heat Up the Summer with Savings
The Delray Beach Marriott hotel has unveiled new summer vacation packages, including special Florida resident hotel deals.
Delray Beach, FL July 16, 2011
Florida residents are in for a special treat this summer, thanks to a deal at the Delray Beach Marriott Hotel. As the summer months continue, residents of Florida looking for great last minute vacation specials can find them at this Delray Beach resort by enjoying specially reduced rates starting at $127/night. The Florida Resident Hotel Deal is available now online using promotional code FR6. Guests must present valid ID upon check-in.
Florida residents are not the only ones who are in luck with special offers at a South Florida beach resort. Not wanting to neglect the millions of visitors that visit Florida each year, the Delray Beach Marriott Hotel has also introduced other Florida Beach resort deals.
Amazon wants California voters to reverse a new law that requires online retailers to collect sales tax on purchases made in that state. Amazon previously dropped its California affiliates in response to the law.
Amazon plans to put the question to California voters by way of a ballot measure. The company will need to get more than 400,000 signatures by late September. The statewide election is in early February.
California’s law, passed in June, requires online retailers to collect sales tax. The state hopes to generate $200 million in tax revenue. Other states that have passed “Amazon laws” include Arkansas, Connecticut and Illinois.
During a recent visit to Consumer Reports’ headquarters, Amazon founder and CEO Jeff Bezos argued that federal legislation is needed to rectify the issue.
Our point-of-view on this is that we should simplify the sales tax system, and weve been insisting on this for 10 years.
With every day of unproductive negotiations between the White House and congressional Republicans that passes, the prospect that the United States government will find itself unable to pay its bills becomes less unthinkable. So what happens if Congress doesnt increase the debt ceiling?
Though we still believe that to be unlikely, the prospect is worth exploring. Its uncharted territory. A small technical default in 1979 doesnt compare to what would happen if the U.S. Treasurys coffers were short, come early August. Does it mean Uncle Sam defaults the next day on principal and interest owed lenders the foreign and domestic holders of U.S. Treasuries?
Not necessarily. President Obama would have options, but none of them are good. Odds are bondholders would be paid first, chewing up a few billion in monthly tax collections, which are sufficient to cover about three-fifths of federal spending.
It’s so easy to lampoon the Dow Jones industrial average that to praise it in front of serious investors and financial advisers risks exposing myself as dumb and naive. But I’m going to do it anyway. Let me say loud and clear: I love, love, love the Dow. I want it. I need it. I wish Frankie Valli would do a song. Or Neil Diamond. Or Elton John.
Im aware that the Dows price-weighted formula would get laughed out of a brainstorming meeting of todays financial engineers. When Charles Dow launched the industrial average in 1896 with a dozen stocks, he simply added up the share prices and divided by 12. Now, the only difference in the formula is the total number of stocks (30) and the divisor, which has evolved over time to reflect stock splits and changes to the Dow components.
Im also aware that the Dows industrial mix doesnt accurately define contemporary commerce. The Dow has no Apple (symbol AAPL), no Google (GOOG), no Amazon.com (AMZN) or, if Ive already got you yawning, no Starbucks (SBUX).