The Default News

It’ll be interesting to watch our government and housing sector during the next three weeks. Here are three topics I’ll keep an extra eye on.

1. Moody; last night Moody warned that the U.S. AAA bond rating was in peril if it doesn’t put the kibosh on this debt-ceiling debacle.

2. Foreclosures; today CNNMoney reported that foreclosures plunge in the first have of 2011.

3. U.S. Debt; August 2nd the U.S. debt limit ends, and at that time our debt will total $14.29 trillion.

Let’s try to make sense of this craziness.

First, if Moody lowers the rating, we’ll pay higher interest rates to buy a car, home and qualify for credit. That doesn’t sound great; certainly not good news for me.

Second, the foreclosure plunge is a false hope, and that’s primarily because have an excess amount of inventory. CNNMoney reported that RealtyTrac’s CEO, James Saccacio, sounded a sour note, however, contending that the drop-off in filings can be traced not to economic improvement or a pick-up in the housing market, but to processing delays brought on by the robo-signing scandal in which it was discovered that bank employees were signing foreclosure documents without following proper protocols.

“[That's what is] pushing foreclosures further and further out — we estimate that as many as 1 million foreclosure actions that should have taken place in 2011 will now happen in 2012, or perhaps even later,” Saccacio said. As a result, it will only prolong the housing slump, he said.

Third, should we raise the debt ceiling? Since I’m not an economist or a financial planner I’ll try (said with sarcasm) to use common sense to analyze the question, and that will be done with a “what if” theory.

What if your parents spent more than they had and you were responsible for paying off their debt? Would you let them borrow more money?

On one hand, as their child no doubt you’d want to honor them. After all, they brought you into this world. Cared for you. Helped you grow and prosper. On the other hand, their spending is out of control, and you don’t share their illogical spending habits, and – most importantly – you don’t have the money to pay off their debt. Can’t there be a compromise were they still have freedom and happiness?

At this point, I’d rather have a realistic understanding of the problem than face it with ignorance.

As one who reads the news daily and tries to keep a pulse on the housing crisis, it’s frustrating when the media primarily focuses on our political defenses rather than our offences?
… Don’t call my bluff.
… “But House and Senate freshmen, they actually want to make spending cuts, …. That’s the divide.”
… GOPs ripped the intraparty fissure wide open Tuesday when McConnell announced a plan that would give President Obama the authority to raise the debt ceiling by $2.5 trillion without making budget cuts.

Isn’t there anything they agree on? Isn’t there some way to create a compromise? What about listing to Dave Ramsey’s advice; to be debt free pay off the smallest debt first. Once it’s paid off, apply that ex-monthly payment towards another bill. I don’t have all the answers, but that sounds logical.

To get a better understanding of our debt, check out this interactive graph, Hitting the Limits from CNNMoney.

God only know if President Obama and other U.S. leaders have the ability to solve our economic crisis. As for me, I’ll watch my spending, stay focused on increasing my revenue, and keep them in my heart and pray for the best.

Amen.

How does the U.S. debt ceiling work & why does it matter?

Watch the full episode. See more PBS NewsHour.