US Debt Ceiling and The American Expat
Well, it is getting harder not to tread into US politics but the debt ceiling will crush some American expats if the US defaults on its debt. The effect on the dollar to Philippine peso is obvious but it is worse than just that. I believe the fear is already showing up in currency trading circles.
I think the US will default unless the new move to give President Obama the power to raise the debt ceiling himself. There is no way the Republicans can now agree to a tax increase and there is no way the Democrats can back off no tax increase. So it will take a special act to allow Obama to do it. Congress is not capable of doing it. There will be a tax increase if there is to be reduction in the deficit. It can’t be accomplished by cuts alone.
We need cuts and the Democrats need to get use to that idea but with the Republicans holding that a tax increase is off the table there can be no movement. The Republicans are not going to give in on that.
PBS News is reporting that some Republican don’t see a default on US debt as something that must be avoided. “It might be okay.” You’ve got to be kidding me. Now I will believe that some Republicans would love to see a default as long as there is a Democratic president in office.
Now Obama has said that we can’t guarantee social security payments on August 3rd. I know expats living in the Philippines that have nothing but their social security payments. I suspect that most people living on $700 to $1000 a month don’t have a great deal in savings. Most probably have virtually nothing in savings.
If they loose their funds for even a short time, they will be hungry. They will not be able to pay their rent, they will not be able to pay their visa extensions fees. The American expat’s life will be in chaos if he depends on his social security pension which he paid for!
The Debt Ceiling and the Dollar to Philippine Peso Currency Trading
The dollar to Philippine peso is back under 43 today and that shouldn’t be a huge surprise. If it doesn’t fall to 41 over the next week, I’ll be surprised. I’m actually considering all my money to the Philippines now. I probably should. However, I think congress will agree to give the President emergency power to raise the debt ceiling himself. If they don’t, I will transfer my savings to the Philippines.
In fact, I may have no choice, I probably should do it now, but I hate to pull money out of savings and watch it go poof! I could do that though and then if things go okay, put my next paycheck back into savings. I just don’t like the sound of that.
I may have no choice because I’m a civil service retiree. I don’t know if this will affect my pension or those in the military. Under the old Civil Service Retirement system we are not paid through social security. We have our own system. That changed only about two months after I was hired. If I was under the new system, I’d either be working or dead or maybe fired because I was missing a lot of work. I wouldn’t have qualified for social security disability.
I don’t now if my pension check can be counted on next month. I’m not counting on it. I’m putting off a purchase because of it. Jessie needs a new computer. Putting that off is not devastating for either of us. For other expats living in the Philippines, this is a very troubling time.
Of course, both Moody’s and S&P have warned that if the USA tries to pay only its interest on its debt that this will put the US bond rating in jeopardy. It certainly should. If it were any other country, the bond rating would have already been lowered due to our inability to raise the debt ceiling.
The USA enjoys low interest rates now because the chance the USA would default on its debt has been impossible up until this point. If the USA to default on its debt the US dollar will never again be held in the same high regard that it is now. The deficit will grow even large because the horrendous debt we have will require more to service. Further requiring more tax increases. The idea that a default will be okay signifies me we have morons in congress.
A default on the US debt is not caused by finances. It is caused by political issues. That should not be acceptable to the American people. I don’t think it will be.
Without the special measure not being considered, I consider a US default on its debt unavoidable myself as I don’t see congress increasing the debt ceiling before the August 3rd deadline.
Filed under: Living In The Philippines
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