Solano Real Estate Scene: Debt ceiling debate full of irony
The U.S. was at the brink of defaulting on its obligations in recent weeks, which would have been catastrophic for our citizens and our credibility around the world. Confidence in the U.S. dollar and all our markets, including real estate, would have potentially plummeted.
The debt limit is the total amount of money that the United States government is authorized to borrow to meet its existing legal obligations, including Social Security and Medicare benefits, military salaries, interest on the national debt, tax refunds and other payments.
Jamie Dimon, CEO of JPMorgan Chase, said something at a business leader roundtable that I thought was appropriate, ironic and funny at the same time. He gave four or five reasons for Congress to immediately increase the debt limit.
His first reason, he said, was a “morality point, we all teach our children to meet their obligations and the nation shouldn’t be any different.” Sure, most Americans try to teach their kids to meet their obligations, but I would estimate that only five of the top 10% of parents and schools teach our children financial literacy.
I think it’s funny and ironic to say that defaulting on our debt and bouncing checks would set a bad example for our children when the U.S. hasn’t had a balanced budget since 2001, and we are overdrawn in our checking account by close to $30 trillion. This year we will pay $320 billion in interest alone on this borrowed money.
Sure, 9/11 sadly happened and this pandemic is the worst one I have ever seen, but yikes, talk about setting an example for our kids.
Certified financial planners and our post-Depression era seniors always suggest having cash reserves for a rainy day and investing for the future. My parents had seven of us kids and were truly great parents who taught us to have good manners, to do our best in school and be kind to others – but never talked about financial literacy or budgeting.
I jokingly blame them for my financial mistakes in the 1980s because my financial education came from the school of hard knocks. My late Grandpa Merlin was born in 1902 and thankfully he mentored and critically lectured me from 1986 to 1988 about money, and helped me financially grow up and stop spending more than I made.
I love our country, but if a buyer called me to be prequalified to purchase a home and 10% of their income was needed to pay their interest on their debt and they were spending more each month on their obligations than their income, it would be hard to get them approved to buy a house without a very strong co-signer.
Now that I think about it, I guess the federal government has 329 million co-signers and 20% of those co-signers have a positive net worth, decent income and a good credit rating.