It is a rare evening nowadays that one’s ears are not affronted by the constant partisan posturing around the debt ceiling and the right path forward. Whether you’re a Rachel Maddow fan, a Bill O’Reilly follower, or just plain don’t give a damn, you’re certain to be impacted by whatever outcome results from these dreary months of “he said, she said.” In a mere week, we may all bear witness to the unprecedented downgrading of our debt in light of our government’s inability to put the interests of the country first.
Why, oh why, are you reading about the debt ceiling on your beloved Apple, Peeled blog? Well, we like to believe we’re not myopic little real estate addicts … rather, we like to explore the macro factors that may well have micro consequences to you: the buyer, seller or renter of NYC real estate.
So, debt ceiling crisis 101:
- The debt ceiling is like a self-imposed credit card limit for the government.
- Federal government borrowing, now at $14.3tn, must be approved by Congress via the raising of the ceiling, as it has been increased previously every time.
- This $14.3tn, while the largest government debt in the world, stands at 95% of GDP, below Japan (244%), Greece (161%) and Italy (113%).
- This issue is coming up now because we’re on the verge of the infamous 100% debt-to-GDP ratio past which many believe a sovereign debt crisis to be inevitable.
- This enormous debt has been driven up by the cost of our multiple wars, Bush’s tax cuts, and the cost of the bailout, among other factors.
- If the debt ceiling isn’t raised, the US government will default on its debt, driving down our credit rating and the foreign investment that goes along with it.
- Whatever deal may be reached is considered a band-aid, until a more permanent agreement is reached on major spending cuts.
- Creditors may well already been spooked by our stalemate, leading many to believe a AA credit rating is all but a guarantee.
Now, in terms of the impact on real estate, we thought we would create a kaleidoscope of impacts for the bears and bulls among you, in the form of the Good, the Bad, and the Ugly … Apple, Peeled style:
Which camp are you in? We want to hear from you!