For those who advise that we should fail to raise the debt ceiling and allow government spending to take a 40% cut overnight (the Federal government currently borrows 40% of the money it is spending), I would ask them to consider the following. Maryland bonds (about $718 million worth) were about to be sold tomorrow, July 25. As stated in the offering, the money from these bonds was to be used for:
- A variety of public purposes, including the acquisition and construction of State facilities; capital grants to local governments for public schools, community colleges, and jails and correctional facilities; and matching fund loans and grants to local governments, nonprofit institutions, and other entities for hospitals, cultural projects and other projects.
- Purchase federal securities for deposit into an escrow deposit fund and applied to the advance refunding of certain outstanding general obligation bonds of the State. The purpose of the refunding is the realization of savings in debt service costs
Catch that last one? The State of Maryland was essentially going to buy Federal bonds, pay back existing bonds early, and thus save the citizens a fair bit of money. I like the fact that the officials of our state are trying to save us money on debt service.
The bad news? The bond issuers have placed the sale on hold for 3 days, due to the uncertainty of the outcome of the brouhaha in Washington. They are hoping to be able to charge the State of Maryland considerably more than the planned 3.25% to borrow the bond holder's money.
This is good news if you're a bond issuer (a bank) or a bond holder (an investor) but terrible news if you are a bond seeker (the people of Maryland). We are about to pay a great deal more of our tax money to lenders/creditors and less to accomplishing those things we think a State should be doing (building roads, schools, hospitals, etc). This also means that people who make the raw materials that go into those projects, the people who work on those projects, the people who manage those projects...all of them are going to find they have much less to do than they thought.
And this isn't happening on this so-called "deadline" of August 2nd. These impacts have the potential to be felt by the people of Maryland (and beyond) much sooner and for much longer...we could be stuck with these increased interest rates until the bonds mature...15 or 20 years.
So, I encourage your readers to call their Congressman / Senators and urge them to vote to raise the debt ceiling. There certainly should be a rousing and compelling debate about the appropriate level of federal spending/borrowing. But that debate should be able to resolve itself in a way and a time that doesn't pose a threat to our economy.
For a bit of proof that I'm not making this up, please see the following link: http://www.nytimes.com/2011/07/22/us/politics/22states.html
Thanks,
Michael Scott
Quantico
8 comments:
Shut up, sit down and HOLD ON. We're on a runaway train mr scott. It's better we take a loss now than farther down the tracks. Basically your saying we need to CONTINUE buying loans to pay for previous loans from previous loans from habitual over spending? I take it you have no children nor expecting any grandchildren, surely you wouldnt buy a new boat and expect them to pay for it? Our is it you have no problem expecting my children and grandchildren to pay for your borrowing? Can someone check the water in Quantico please?!?!
WE MUST STOP THE SPENDING AND BORROWING NOW!!!!!!!!
Where were the people saying WE MUST STOP THE SPENDING AND BORROWING NOW when Bush took us into the Iraq and Afgan wars? Hmmmm?
If Bush spent 16trill....I'd said it then too.... Does it mater that this pres. has spent more than all the other Presidents combined? It doesnt matter to me who, or which party, or even which color they call themselves. STOP THE SPENDING!!!
What is the impact if the debt ceiling is raised yet again?
What happens 2 years from now when the debt is 16.3 trillion and they want to raise the ceiling again?
There is no better time to stop this run away train now before it starts down the mountain and can't be stopped.
So let me get this straight. We have gangrene that is in our feet and slowely eating upwards. The gangrene is debt that is hindering us from walking. The democrats want to borrow money (get crutches) so we don't have to take medicine or cut off the bad tissue.
What happens when the gangrene has eaten our entire leg two years from now? Bigger crutches?
The Dumbocrat theories are so moronic. Why can they not see what THEY are doing to this country??? Just more scare tactics. I suppose that is the only thing they can do. Mr. Scott, go bury your head in the sand.
The guy signed his name.
Least you can do is disagree with him without telling him where to put his head.
Folks, you ain't talking about your children and grandchildren any more.
You're talking about several generations down the pike. Guess what? The debt would keep piling even if you pretty much eliminated government. Because the debt is generating its own debt and it's growing exponentially. It's been compounding.
If you think the economy sucks now, wait'll the U.S. defaults.
I REALLY liked his next to last statement "....that doesn't pose a threat to our economy"....LOL!! where has the writer been for the last $14 TRILLION dollars?? I think THATS a pretty big threat. He didn't say anything when his boy, obama, was WRECKING the economy and spending money we can NEVER, EVER pay back. Thats leadership? The writer is uh, well, uh,....he's an...Democrat. as
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