The triple-A rating will most likely be downgraded, and that means, as AEM has been reporting, that interest rates on student loans will spike.
CNN reiterated the point today:
If the debt ceiling isn't raised, many, including President Barack Obama and the Treasury Department, warn that the country will risk unprecedented default. That default could cause Americans to face rising interest rates. It could also mean that the value of the U.S. dollar would drop compared to other currencies. As interest rates increase, the cost of borrowing rises, so individual mortgages, car loans and student loans could become significantly more expensive. As individual Americans' personal finances take a possible hit, some financial experts have warned that America's AAA credit rating could also be downgraded, threatening an already drooping stock market.
Brace yourself.
"Someone was telling me about these people . . . these . . . citizens. I don't get the term. Do you?"
[UPDATE]
Krugman reminds of us a very interesting question and answer session between the President and Marc Ambinder last December:
Obama, at his press conference last December, announcing his surrender to the GOP on tax cuts; the questioner was Marc Ambinder:
Q Mr. President, thank you. How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now, going in. Was there ever any attempt by the White House to include raising the debt limit as a part of this package?
THE PRESIDENT: When you say it would seem they’ll have a significant amount of leverage over the White House, what do you mean?
Q Just in the sense that they’ll say essentially we’re not going to raise the — we’re not going to agree to it unless the White House is able to or willing to agree to significant spending cuts across the board that probably go deeper and further than what you’re willing to do. I mean, what leverage would you have –
THE PRESIDENT: Look, here’s my expectation — and I’ll take John Boehner at his word — that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. And so I think that there will be significant discussions about the debt limit vote. That’s something that nobody ever likes to vote on. But once John Boehner is sworn in as Speaker, then he’s going to have responsibilities to govern. You can’t just stand on the sidelines and be a bomb thrower.
And so my expectation is, is that we will have tough negotiations around the budget, but that ultimately we can arrive at a position that is keeping the government open, keeping Social Security checks going out, keeping veterans services being provided, but at the same time is prudent when it comes to taxpayer dollars.
Related Links
Pedro Nicolaci da Costa, "Default cloud hangs over U.S. job market," Reuters (July 31, 2011)
Progressive Co-Chair Rep. Raúl M. Grijalva Statement on Emerging Debt Deal, Official Statement (July 31, 2011)
Gregory Floyd, "It's Time to Question Labor's Ties to Democrats," HuffPost (July 30, 2011)
"Debt Ceiling Fiasco and Student Loans," AEM (July 30, 2011)
"Who's Terrified? Debt Ceiling Fiasco and Student Loans," AEM (July 29, 2011)
"Call to Action: Tell Leaders in D.C. to Raise the Debt Ceiling," AEM (July 28, 2011)
"Sell Those Indenture Instruments Immediately! The Debt Ceiling Disaster and Student Loans," AEM (July 25, 2011)
"The Debt Ceiling Fiasco and Student Loans," AEM (July 25, 2011)
9 comments:
"Someone was telling me about these people . . . these . . . citizens. I don't get the term. Do you?"
During the Cultural Revolution a member of the Politburo handed Chairman Mao a document referring to "citizens". Mao handed it back with a notation, "What is a citizen?"
Cryn, for what it's worth - as a matter of spiritual charity IN WHICH YOU BELIEVE! ;-) - ah, just to keep your spirits up, here's a song that helped me when I was an impoverished law student (acutely impoverished because my Dad died in a car accident while I was in law school)...
...when I was an impoverished law student living in a hovel in the ghetto in - alright in Philadelphia - I used to listen to Steely Dan while typing on my manual typewriter, purchased for ten dollars (like 20 or 30 dollars today) from a Jewish charity shop nearby.
(I'm not a Jew, you know I'm a Catholic, but I especially like/love the OLD FASHIONED kinds of Jews, like the ones who ran that charity shop! The old Jewish Babushka - maybe 90 years old, probably born in the Russian Empire in circa 1890s - who sold me that typewriter for ten dollars, said to me, "What, you're in school?" I said, "Yes, I'm a law student." She said, "Then you need a typewriter so you can write your laws. Why don't you have a typewriter? Here's a good one, it still works fine! Nothing wrong with an OLD typewriter, long as all the letters work!"
She also sold me a good secondhand jacket, because she was worried about me being cold. And when she asked me if I was Jewish, and I told her I was Catholic, she said, "That's okay, honey, you just keep studying and you'll be a good man. Ya know our Synagogue is (a few blocks away), come on over sometime, ya don't have ta be a Jew but we have some good events! Are ya married?"
;-) :-)
And so, back in those days - in the dark days of Reagan (dark, but less dark than today!) - THIS song often bouyed my spirits! So now I give it to you, Cryn, in the same spirit of charity as that wonderful old Jewish lady who sold me my circa 1960 manual typewriter at her charity shop: http://www.youtube.com/watch?v=kND8TRZap8Y
PS, Cryn, two more joyous, life-affirming Steely Dan songs to share with you:
1. "Dr Wu", this means a lot to me as I lived in China for some years, so I think it might be significant for you, too, as you've also lived in the Far East - and please note the themes of drugs/escapism, yet on the other hand, um, "escape" is exactly what PRISONS do NOT want their inmates to do! ;-) And Our Lord Jesus Christ is a LIBERATOR of slaves and prisoners! Here ya go: http://www.youtube.com/watch?v=1ATPFtDWW_k
2. And this one, "Sign in Stranger", I dedicate to the liberation all American debt-slaves. I would be one if I hadn't successfully emigrated, therefore I send them THIS song with empathy: http://www.youtube.com/watch?v=IImqniitiMU
And then there's this, for any of your readers who might successfully emigrate permanently as I have done: http://www.youtube.com/watch?v=TSnL4_IhPHQ
Cryn, Oh, but THEN - as I know all too well - most of your American readers believe America is a "land of opportunity", and that America is (in Lincoln's evil and untruthful words) the "last, best hope of Mankind."
BULLSHIT!
America is NOT any "last hope of Mankind", and to believe so, is a bloody SUPERSTITION!
The USA is just one nation-state among many. It has been a good one in many ways, entirely because of its Christian heritage.
(Look to the dead Russian Communist Empire, and to Europe's EU, to see the heritage of the secular "Enlightenment" today!)
Regarding the LIE of the USA being a "land of opportunity", I submit the following song about my Grandmother's Irish Grandfather from County Mayo Ireland - who,because he had no money and no job - was recruited by Lincoln's Army as soon as he got off the boat, and was slain in a battle for the bloody Yankee Bankers at Petersburg, Virginia in 1864
(and one of my father's cousins inherited the bullet that slayed my him)...
...my Irish gg-grandfather from County Mayo, who died for Lincoln, and so he died for NOTHING but power and money, as so many American soldiers are still doing today...
AND THEN THERE'S THIS, DIRECTLY RELEVANT TO THE BLOODY AMERICAN EMPIRE!
A historically based, realistic depiction of the "Christmas Truce" of 1914. I had several ancestors on both sides, British and German.
THIS is MY answer to the American Empire AND to how it has bankrupted my native country the USA! And this is my answer to all American lunatics who pretend to love war (in which most of them have never fought!) Here, Cryn, please enjoy, and save this clip for next Christmas! ;- :-) http://www.youtube.com/watch?v=aaJcSNBh-ok
Cryn:
You seem to have a distinct Republican slant these days. Aren't you batting for the wrong side?
Uh . . . I am praising Democrats on Twitter. I have praised Democrats on AEM. I am meeting with more Dems in August than Republicans, and you think I have a "Republican slant?" Odd. Simply odd.
And one more thing . . . I just want ANY politician to give a shit. So far, I have had more luck with Democrats. However, I am meeting with an aide at a Republican's office in August, too. It doesn't matter. As long as they want to work to solve the student lending crisis. My politics are clear, but that does not influence the work I do for the indentured educated class.
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