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Author: TheDope1 Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 1962073  
Subject: Re: Geithner: get rid of debt ceiling Date: 11/17/2012 11:15 PM
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Are you aware of any corporation that has a "debt ceiling"?

That's an apple and a carrot. As in, not even two pieces of fruit kind of a comparison. If a company takes on too much debt its shareholders rebel and the market tends to devalue it. Rather rapidly.

Continuing the example, though: Companies with well-managed or zero debt loads are considered safe havens for investors. Food for thought.

I you don't want more debt, don't obligate yourself to spend money (budget process).

I agree. It would be *really nice* to have Obama put his signature on his very first official budget. Sometime in his second term. Just sayin'.

If you spend more than you have coming in, your creditors expect to be paid back. If their loans are due, they expect you to find the money to pay them back somewhere. They don't care where you borrow the new money, and they don't give a darn about your "debt ceiling".

Except that once you start borrowing the money left and right, your ability to pay it back gets less and less. Why? The interest payments you have to make reduce your ability to expand into new things, a problem that gets magnified when all the money you're borrowing is going to service your past obligations. In other words, it's a death spiral.

Eventually the market grades you as so risky the interest rates you have to pay to borrow even a dime become unworkable.
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