The U.S. government is about to reach it's $14.3 trillion debt ceiling by the early spring of 2011. Yesterday, the White House Council of Economic Advisers Chairman Austan Goolsbee made a strong case that the debt ceiling would have to be raised or the economy in the United States would be catastrophic and worse than anything we seen in 2008. This sounds very similar to when the U.S taxpayers were frightened into supporting the Troubled Asset Relief Program(TARP), by bailing out the 'too big to fail' banks such as Goldman Sachs Group Inc.(NYSE:GS
), J.P. Morgan Chase & Co.(NYSE:JPM
), and Citigroup Inc.(NYSE:C
) just to name a few.
What would really happen if the debt ceiling was voted down by the new Congress? Would America just crumble and become a third world country? The nation would probably feel some short term pain as many government jobs would be eliminated and spending cuts would be forced to be made. There would be chaos in the short term and that cannot be disputed.
What people don't realize is that this is exactly what this nation needs. This country needs an enema to flush out all the waste and garbage that it has been consuming for over 30 years. If the debt ceiling is not raised the United States would be able to finally face the hard reality that the endless credit card spending is over. If a family or an individual spend all their money and use up all their credit they have to face changes and stop spending. Look at the current mess that this country is in with high foreclosures and unemployment. Foreclosures and unemployment is the result of spending more than you have and using excessive credit. Why are things so different for the U.S. government? Perhaps, it is because the U.S. taxpayer will continue to foot the bill and bail out the reckless spending.
First, the U.S. taxpayer bailed out the large major banks that were too big to fail. Well, guess what? These large major banks are now even bigger. These banks should have been able to fail. Then the banks would have been broken up into a hundred pieces in bankruptcy court. The parts that function and were solvent would still be around today and able to function as intended. The rest of the business would have went by the waste side and written down as a loss. These days the banks have phony accounting where the liabilities are now assets. What's wrong with this picture? Did we not learn from Enron, Global Crossing, Adelphia, and other companies that used fraudulent accounting?
Second, the U.S. taxpayer had to bailout insurance giant American International Group Inc.(NYSE:AIG
), and government sponsored mortgage giants Fannie Mae, and Freddie Mac. Surprisingly the mortgage giants Fannie and Freddie are still costing the taxpayers billions of dollars. In fact, the large major banks are selling their bad mortgages to Fannie Mae and Freddie Mac. What kind of scam is this?
Today the U.S. national debt is now over $14 trillion dollars. When is the United States going to get it's economic house in order? There is not a doubt in my mind that the debt ceiling will be raised again, and again by the politicians until it finally cannot be raised anymore. Right now is when the new Tea Party congress can make a stand and do what the American public voted them in for. Will they just become a new group of puppet politicians like all the rest of them regardless of party. We shall see soon enough.