Is it good if the US raises its debt ceiling?

Is it good if the US raises its debt ceiling?
Jul 25, 2011 03:45
guestMars	I am not an economist and do not know much about world economy. Recently, many netizens have been talking about US debt. According to the news reports, the debt ceiling talks between the US president Obama and Republicans collapsed two days ago. Mr. Obama was angry and warned that the US might default its debt. “If the US fails to meet the deadline to raise the $14.3tn limit on US borrowing, the Treasury could run out of money to pay all of its bills - which could lead to interest rate rises, threaten the US economic recovery and in turn the global recovery”, a BBC report says. The result is horrible. But is it really good if the US raises its debt ceiling?

Jul 25, 2011 03:45

guestMars

I am not an economist and do not know much about world economy. Recently, many netizens have been talking about US debt. According to the news reports, the debt ceiling talks between the US president Obama and Republicans collapsed two days ago. Mr. Obama was angry and warned that the US might default its debt.

“If the US fails to meet the deadline to raise the $14.3tn limit on US borrowing, the Treasury could run out of money to pay all of its bills - which could lead to interest rate rises, threaten the US economic recovery and in turn the global recovery”, a BBC report says.

The result is horrible. But is it really good if the US raises its debt ceiling?

Aug 1, 2011 08:50

GUEST19140

For me and others, it's all a bunch of numbers.
The US was the biggest creditor, now it's the biggest debtor.
So what? European nations owed the US a lot of money after WW2. But they never paid their debts in full. Do you really think that the US will pay its debts in the future?

Soon, it will spend more money on interest payments than any other item in their budget, and they still borrow more from countrues who have no choice but to lend them more.

It looks to me that those who lend worry about the money more than those who borrow...

Aug 1, 2011 22:10

MARRIE
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<<Is it good if the US raises its debt ceiling?>>

Raising or lowering of debt to US is particularly like taking one step forward or one step backward on the tip of isolated rocky cliff, the results of which is nothing more then falling. Excessive debts is no good. Borrowers gotta be much more fearful than lenders in terms of the vital consequence hit on US itself caused by printing money and subsequent corp bankrupcy at high cost of borrowing.

Aug 3, 2011 04:54

ICEBERG
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The debt ceiling doesn't exist. The US can raise it as it wishes. All lenders have been "menaced" by the US and they all worry that the US goes "bankrupt". But the US never worries about it.

"I have already borrowed a lot of money from you. If I die, you will die with me. So do as I say, OK?"

All lenders, wake up and stop lending money to the one who has no capability to pay you back. It's like a gambling game. You always want to recover your losses. So you put more money in. Finally, you will find that you have lost everything you have.

Aug 3, 2011 21:59	#4
JIMMYB Points: Join Date: Feb 7, 2007 Status: Offline	Iceberg, I am with you. China is the biggest holder of the US debts. I think that China should decrease its holding of the US debts gradually to prevent the potential risks. China shouldn't put all the eggs in one basket.

Aug 6, 2011 23:11

CANADAGUY
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Quote:

Originally Posted by JIMMYB

Iceberg, I am with you. China is the biggest holder of the US debts. I think that China should decrease its holding of the US debts gradually to prevent the potential risks. China shouldn't put all the eggs in one basket.

Jimmy I agree with you 100%.
The key here is that China begins to 'gradually' decrease its holdings of US debt.

Let's first assume that the U.S. can get itself out of the mess it's in now and the markets settle down.

If that happens, China should gradually begin to reduce its U.S. exposure. It would be the smartest move that China could make right now.

Aug 7, 2011 12:50	#6
GUEST10258	Who knows? Perhaps the countries to which the United States owes money will just cancel the debts... just as the USA has forgotten about the billions and billions and billions of dollars it "lent" to so many countries itself. Haha... yeah, right. Like THAT's gonna happen! lol

Aug 7, 2011 22:57

JIMMYB
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Canadaguy, the Eurozone is also in a mess. I don't know much about the World Economy. Why can't China spend its large amount of foreign exchange on improving its citizens' life standards?

GUEST10258, I don't think that other nations will cancel the debts. They buy the US debts to make money. If the USA fails to return the debts, they will lose a lot of money. Why most nations choose to buy the US debts? Because they believe that the US will keep its promise. Now Standard & Poor's has downgraded its rating on U.S. Government debt from AAA to AA+. Why did SP do this? It may have realized some potential risks.

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