Ellie's World

Sunday, July 17, 2011

The Debt Ceiling

If there's one thing that has come out of the recession for Americans is the need to take a closer look at the way financial systems are run. Left in the hands in others - both visible and invisible - the economy is imploding along with the rest of the program. The feeling of "those in power can fix anything and it all recovers at some point" is in question and may no longer happen. Most people understand that collapse is inevitable - some preparing - others not. The debt ceiling will be raised on time - but then what?

A friend emailed the following following link. He believes the repeal of the 1933 Glass-Steagall Act was part of the reason for the collapse. Whatever the reasons - it was all destined to happened now.

The Banking Act of 1933 was a law that established the Federal Deposit Insurance Corporation (FDIC) in the United States and introduced banking reforms, some of which were designed to control speculation. It is most commonly known as the Glass-Steagall Act. Provisions that prohibit a bank holding company from owning other financial companies were repealed on November 12, 1999. This effectively removed the separation that previously existed between Wall Street investment banks and depository banks. Some experts believe that this repeal directly contributed to the severity of the financial crisis of 2007-2010 by allowing banks to gamble with their depositor's money.

Explaining the debt ceiling CNN - July 17, 2011

How the US debt ceiling could hit your finances CNN - July 17, 2011

What happens if the $14.3 trillion debt ceiling, which places a legal cap on the amount the country can borrow - and which the U.S. actually hit on May 16 - isn't raised? No one knows. There's no historical precedent for what happens if the US defaults on part of its outstanding debt obligations.

Don't panic ... plan carefully ... make important choices now.