So the US government managed to raise its debt ceiling just hours before it reached its Aug 2nd deadline. The US govt sure love its drama. (The Sg govt on the other hand, don’t have much drama but they are very elusive; everything is done behind closed doors.) This is not the first time the US politicians agree on something last minute- it happened before on Apr 10 when they have to pass a deal to prevent a total Government shutdown.

When can all these old folks behave like adults and stop all these foolishness?

In case some of you guys are blur on this topic, I don’t blame you. You cannot get the real picture because economists like to use technical jargon and politicians like to wayang.

But in a nutshell it goes like this:
1) The debt ceiling is the absolute maximum amount of money the US govt can owe. It’s like your Dad saying to the family, “Ok, we have some debt from Courts and Ikea and our family debt cannot surpass $8,000. Your Dad has just made a debt ceiling.

But instead of $8k, the US govt owes $14.3 TRILLION dollars.

2) The reason why the US has so much debt is because it spends more than it makes money. It’s like your Dad earns $2k a month and the whole family spends $3k a month. The other $1k your Dad borrows from your China PRC neighbor. The US govt has a lot of expensive Govt programmes that needs payments to keep it running.. like the wars in Iraq and Afghanistan, NASA space projects etc.

3) If the US Govt did not raise its debt ceiling, it will have to default on its payments. Default simply means you cannot pay off your debt. The US govt did consider a “technical default”; meaning to delay paying interest for a couple of days. But China responded by saying “The result will be very serious and I really hope that they would stop playing with fire.” If the US defaults, the value of the US dollar will go down you see.

To cut the story short, the US govt DID increase it’s debt ceiling as expected. HOWEVER, yesterday, the USA lost its triple A credit ratings and got downgraded to AA+. This is a big deal because the USA always had a triple A rating since 1941.

A US economic meltdown will affect everybody. It’s going to be a recession like no other… and recession means less jobs, more homeless people, more crime… as if Singapore is not bad enough as it is.

My only advice to give you guys is to get rid of the US dollar before it becomes worthless paper money. Gather all your American dollars and convert to SGD NOW. If an economic doomsday do happen and we experience a Great Depression, I’ll meet you at Bukit Timah and we’ll hunt for squirrels to eat okies.

We are going back to Caveman days!
Evil Bunny!

PS: As scary as it is, don’t panic as yet. Even Russia is not panicking saying that the AAA rating is not much difference than the AA+. This issue is more of a wake up call for US politicians to fix their domestic financial problems.

Top 5 Places Not To Be When The Dollar Collapse