I received this from a friend recently. . .
This quote is from Ethan Harris, chief North American economist for Bank of America Merrill Lynch Global Research. He’s quoted in an article discussing market reaction to concerns over another global recession:
“The whole debate over the debt ceiling sent four negative messages to the markets…That we have a big debt problem, that we can’t fix it because we have a dysfunctional political system, that it’s okay to use the threat of default to achieve political ends, and that there’s no safety net if the economy goes into recession because we’re not going to have any more fiscal stimulus.”
And this was my response . . .
This is great. I see the same kind of wrong-headed thinking every day on a micro level.
~Families are in debt up to their ears.
~They can’t fix it because they have major dysfunctional communication and relational issues.
~Its okay for spouses to threaten each other and the kids (passively or aggressively) to achieve their own ends.
~There is no way to borrow more money to get out of this in the short run because the Credit Cards are maxed and the home is worth less than the mortgage.
We have to stop thinking that the answers to the macro level problems are more complicated than the answer to the micro level problems.
For a family, they cut their spending and pay off debt. OR, they go bankrupt first, pay the consequences, and then get back on their feet. Certainly the ramifications for the USA would be further reaching than those for a household, but the process should be essentially the same.
The answers hurt, yes. But they are not difficult. We can handle them.
The assessment that we “can’t fix it” is also false. He does not know that. In fact, we will be forced to fix it because at some point either the cost of borrowing or the inability to borrow will stop us from being able to borrow our way through it. Some other solution WILL be found.
We’re Americans Darn it.
Thanks for the quote!