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Does the USA Need a Debt Consolidation Loan?

By now you are well aware of the debt crisis the United States of America is facing. Turn on the news and you will hear about how we are in a recession. The most extreme of financial “experts” will tell you we are headed towards another Great Depression. You obviously have felt the effects of this debt, but what has been causing it?

No Credit, No Problem!

We know the cause, at some point in time lending standards started to deteriorate until they bottomed out just recently. With the “no credit, no problem!” slogan becoming ever so popular, even people with the poorest of credit ratings were able to get a loan. The fundamental problem with this is that these people will have less money to pay off the much higher interest on their loans, which will lead to a default. This has helped cause our current debt problem. Bad credit loans have quickly become bad loans. Overzealous lenders saw a niche market that they could make money off of and threw caution into the wind, and it came back to haunt them and us.

This has affected numerous industries. The housing market has already crashed, and foreclosures are on the rise. Credit card debt is heading the same route. With the collapse of JP Morgan-Bear Stearns, a prominent investment bank, a new trend has started to rise: government bailouts. The US government issued a $30 billion dollar bailout of Bear Stearns, and more bailouts could be on the way. Both democratic presidential candidates Hillary Clinton and Barack Obama support pumping an additional $30 billion dollars into the economy to assist the housing market and other economic stimulus plans. Just recently, Congress issued a $152 billion dollar economic stimulus package.

The FDIC, Federal Deposit Insurance Corporation, was established after the Great Depression to ensure people’s bank accounts to up to $100,000. If the debt crisis gets even worse, it is possible banks could start to fail and the FDIC would be on the hook for billions upon billions of dollars.

The Cost of War

The War in Iraq has become less and less popular, as many site the loss of American lives as the main reason to pull out. The cost of American dollars, however, may be another important reason to pull out. It is estimated that the war costs the United States about $300 million per day, and as of today the total cost is over $500 billion dollars. Estimation is that the war costs each individual citizen about $1,721.

Time to Consolidate?

Let’s tally up the totals: Government bailouts, costs of war, the Bush $600 tax refund plan, and the national debt now sits at over $9 trillion. The national debt has never been higher, after reaching some of its lowest totals during the Clinton administration in the 90s. It seems the United States is in danger of collapsing in debt one day; perhaps a debt consolidation loan is in order. With a debt consolidation loan, the United States could combine all their debts into one, easy monthly payment. The real question is: who has enough money to take on the United States enormous debt? The answer could be China, but that is not really an answer at all is it?


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