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US inches towards default deadline

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Since it's creation two centuries ago the U.S: has had to borrow money as ilustrated in this patriotic advert to buy government bonds. "the united states government has aways paid in full, to the penny. So take stock in America with United States savings bonds." But in the last ten years thanks to two wars, the Bush tax cuts still in place and the great resession. The debt burden has exploded. In amounts to 14,3 trillion $. That's more than the value of all the goods and services the US produces this year. How would that work out per person? In 2007 the governemnt's debt amounted to 19,700$ for each American. Last year that figure rose to 31,600$ and by 2015 the debt per person will equal 48,000$, more than the medium yearly income for an American family. About a third of that debt is held by foreign governments led by China, Japan, the UK, the top oil exporting countries and Brazil. Next week alone the government will be borrowing another 51 billion $ just to keep paying its bills. But by next month, if congress refuses to lift the current dead ceiling, the treasury will only have enough income to honor 60% of its expenses. It would have to default on the remaining 40%. It will not happen, I am confident that the leaders..." Why"? - every leader has said democrat and republican that they will not let the default occur. And so, you've gotta take them all up their word. But without a deal to let the government keep borrowing, confidence of the US treasury would suffer. Either foreign investor and domestic investors might feel concerned about what's happening down at D.C. In sorts of charge a premium to buy securities. In other words lenders would demand higher interest rates for their money. And not just to buy US bonds. It's like snowballing, automaticly not paying your debt would be debt default

Video Details

Duration: 2 minutes and 12 seconds
Country: United States
Language: English
Views: 125
Posted by: on Jul 3, 2011

Barack Obama has cautioned that no area can be off-limits when it comes to tackling the country's record budget deficit despite Republicans' protestations.

On Saturday the US president said any plan to deal with the country's $14.3tn debt must include an end to tax breaks for the wealthy.

Al Jazeera's Tom Ackerman from Washington DC.

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