Saturday, July 30, 2011

Debt Ceiling Fiasco and Student Loans

As AEM has been reporting, the debt ceiling disaster will have a direct effect upon interest rates on student loans. On the floor today, Senator Harkin called the situation a "manufactured crisis." That is true, and pathetic, because millions of Americans will, undoubtedly, pay a price. Most politicians on the floor are now confirming that a downgrade is probably inevitable.

Reuters has put out a great piece on how a fallout from a downgrade will effect average Americans, and one of the questions they had was this:

Will interest rates on mortgages, car loans, student loans [my emphasis] and credit cards rise?
The answer:
Yes. Like any average Joe or Jane who misses a credit card payment, the United States will be socked with higher borrowing costs if it defaults on its debt. If the country loses its coveted triple-A rating, which is expected to happen, the cost to service its debt will probably rise. And that will have a significant ripple effect.
So, what does this mean for borrowers in the next coming months? What will happen to those of us who have interest rates that are variable? It sounds safe to now say that they will definitely go up, and that's probably going to bring people closer to financial ruin, and that is if they aren't already there. We are being terrorized by our own politicians. What is the indentured educated class to do about these economic terrorists in D.C.?

As Senator Bernie Sanders said today, "this will devastate education . . . and the American people." It will devastate Americans, as he emphasized, on so many levels.

Senator Barbara Boxer said this evening, "if we fail this, I hope the President will invoke the 14th Amendment . .  If we can't get together, the President will have to take this responsibility."

Some are also theorizing that Standard & Poor's is threatening to downgrade the ratings status of the U.S. in order to push away the possibility of being investigated.

Related Links
"22 trillion Social Security Surplus revealed on C-Span," Daily Kos, July 30, 2011
Senator Bernie Sanders, "Why Americans Are Angry," WSJ, July 28, 2011
"House Panel Plans to Question Ratings Agency Over Downgrade Threat to U.S.," NYT, July 26, 2011


Anonymous said...

It is all so complicated.

Anonymous said...

It is all so complicated.

Cryn Johannsen said...

Here's the thin - it really isn't, and it doesn't have to be. They raised the debt ceiling under Bush 7 times; they raised it under Reagan 18 times. They are doing this deliberately, and it's disgusting.

Anonymous said...

Yes, it's a created crises. They (the newcomers) are using this as a bargaining chip to get what they want, smaller government and severe austerity with not one penny in tax increases. Bill Clinton said in Obama's shoes, he'd invoke the 14th admendment and let the courts deal with it later.,0,816413.story

Gwen Eiffle of Washington Weekly compared this to playing chicken and we're all in the car. I've been emailing, phone calls that don't get through. If enough of us do this, will it help? Maybe not with the new ideologs, but with the rank and file GOP there's some hope.

Cryn Johannsen said...

I am glad to hear that you have been on the phone. I think the Republicans who aren't these Tea Party types can be persuaded, and I have respect for many of them. But the fact that we've gotten here is insane.

One Who Survived said...

Yet not a single Democrat member of Congress has had the guts to call for an end of the American empire and its stupid f---ing wars, and to tell Israel to go swing in the breeze.

It's not about economics, it's about America's stupid f---ing wars for oil and empire and Israel.

Stacey said...

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