In testimony before the Senate Finance Committee this morning, U.S. Treasury Secretary Jacob Lew warned Congress that uncertainty over the debt limit is starting to stress stock markets. And although the first serious negotiations between House Republican leaders and the White House have finally begun to occur, with Speaker Boehner proposing a short-term increase in the debt ceiling that would continue the government shutdown and reduce the prospects for a U.S. default, government leaders appear to be a long way from an agreement that would prevent the U.S. from defaulting on its debt obligations on October 17th.
Besides Lew, several prominent financial moguls, including Warren Buffett, have described the catastrophic financial situation our country would be in without an agreement. Nearly all predictions include the possibility of global financial markets crashing and a global recession.
The U.S. Treasury actually has a contingency on the books that would allow for the government to pay its debt obligations if no agreement is reached, but that contingency doesn’t allow for additional spending, shorting the U.S. $175 billion in government spending during November alone. As a result, drastic, across-the-board cuts would need to be made.
Many of our members are concerned over what the impact of a default can mean to their bottom line. If you have questions about how this could affect you or what steps you need to take, contact Western Growers’ Vice President of Investments, Matt Lewis.
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