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What would happen if you told the bank that you were underwater financially, that you were paying more than you were taking in, and for the forsee-able future the situation would just get worse… and then you ask them to raise your credit limit?
I would think that they would probably laugh you out of the bank—or they should.
And yet, this is exactly what our Treasury Secretary practically said to Congress.
Treasury Secretary Timothy Geithner said on Wednesday that there was no alternative except for Congress to raise the debt ceiling so that the government can keep borrowing.
“Congress has to do it. There’s no alternative,” he said in response to questions at a House of Representatives appropriations subcommittee. [Geithner says Congress must raise debt limit – Reuters]
Exactly why must they do this? Couldn’t they make sure that the debts were paid as a priority, and then just not fund the rest?
We’ve done the same things for the banks in the UK though, we’ve bailed them out but there has been no reform, no change in practise..