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Debt ceiling deal both sides unhappy.

Debt ceiling deal both sides unhappy.

So there is a debt ceiling deal in Congress possibly averting a nuclear fallout on financial markets and the world markets to be precise. What could have happened is just limited by your imagination. The debt ceiling compromise has pleased only a handful of people. Harry Reid, Sen majority leader said “People on the right are upset. People on the left are upset. People in the middle are upset.” Ain’t that so Harry? This must have been a genuine compromise.

When things are so uncertain, they can go bad quickly. After fighting nearly 2 months President Obama announced a Debt Ceiling deal has been reached, allowing  just about 2 .1 trillion dollars in long-term borrowing till 2013, well beyond his term. This announcement was timed just before  the Asian markets were ready to open and trade and possibly crash. Thus this precautionary tweet from White House warded off a widespread panic and selling. Officials say that House speaker John Boehner has called White House, that they agree to a deal and both parties are in agreement. Here is Harry Reid’s plea to get this done quickly

But soon this agreement was announced both sides of the aisle started sniping at each other. There were accusations and unhappiness everywhere. Both sides have been winged in this deal and getting bruised in a brawl has its consequences that will follow this deal in November 2011.

Once Harry Reid Senate Majority Leader confirmed that a possible agreement is reached with Republicans and then came Mitch McConnell and he announced “this will make sure significant cuts in Washington spending” and assured the markets that a default on U.S. Debt obligations won’t happen as the lawmakers were working to pass the bill quickly.

No matter how bitter the pill to swallow, it is great for the United States and the world financial markets that the threat of US default on its financial obligations is at least not a possibility anymore. Now there is an element of certainty  and firm outcome and that is what the markets would like to see. The US economy would also benefit from this agreement and the reduced spending will forge a better confidence in the public’s mind.

Among the highlights of this deal:

  1. President will be able to raise the debt limit by 2.1 trillion till 2013.
  2. The first cut in spending will come at $1 trillion and out of that $350 billion in defense cuts
  3. A bipartisan committee will oversea further cuts for $1.5 trillion and will report Nov 23 2011.
  4. Congress will vote on committee recommendations by December 23, 2011
  5. There can be further cuts in defense and in the second round in 2013.

Most of the US  stock market took these news and shrugged it off. The markets rose and then fell apart and started trading lower as other economic news weighed in. If this announcements has not been made in time, Asian markets could have crashed or gyrate and the effect could have spread to the US markets. Since a deal is in place the market should be thankful and ready to take off anytime after the passage of the Bill by the Senate.

Most Republicans candidates for Presidential race, have shown opposition to this deal, and they may follow through later on this. The Tea Party is unhappy and so is Nancy Pelosi and the liberal Democrats. The stalemate is however broken, and we may soon motor pass our way on this crisis

{ 4 comments… read them below or add one }

Robel Gass August 1, 2011 at 12:17 pm

This looks good on you say what you can pal!

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Tina Tina August 1, 2011 at 3:58 pm

Well informed article. I come here often. I’d like to exchange some more information with your site, sent you a message.

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Mike Cordoba August 1, 2011 at 4:01 pm

The song is not over yet, so stay tuned in the end all would be well and the cows can come home. You know what I mean ? I’d love to see you write more on it.

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Butterfly August 5, 2011 at 4:01 pm

That’s not just the best ansewr. It’s the bestest answer!

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