OPINION:
Much has been written regarding the failure of our elected officials to reach a compromise on the debt limit, but most of the analysis seems to miss the point.
Most of the commentators are caught up in the group hysteria of the approaching Aug. 2 deadline and cannot see the forest for the trees. The problem is not the threat of possible default on Aug. 2 unless a compromise is reached; rather, it is the virtual certainty of default down the road if the wrong kind of compromise is reached now.
If all we do is kick the can down the road as we have done numerous times before, it will demonstrate that we do not have the ability to bring spending under control - and it will mean that eventual default is virtually guaranteed. Whether it occurs now or later is the only question.
If this phony “crisis” is resolved by the same smoke and mirrors of borrowing more now in exchange for vague promises of spending cuts later, the rating agencies will downgrade our bond rating, interest rates will go through the roof, the deficit will double or triple and we will be faced with a real debt crisis. Watch and learn.
LARRY FOGELBERG
Assistant professor of finance
Troy University
Troy, Ala.
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