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End Of US Debt Issues Further In The Future Than Many Expect?

When the debt crisis hit the US and a plan was signed to avert a potential default, a December deadline was set for the US deficit panel to find over $1.2 trillion in savings over the next 10 years. Many people thought that after that deadline, it would be relatively smooth sailing for the next little while.

But unfortunately, that doesn’t seem to be the case – coming in late 2012, along with the next election, are a lot of events that may shape the future of US financial policy.

The two main issues are tax cuts made by George W. Bush that are set to expire at the end of 2012 and an Alternative Minimum Tax issue that may effect the middle class if it is not fixed before the deadline.

When you look at these two issues alone, they could make a huge difference in the financial health of the US – if the cuts are extended, more money will have to be trimmed from the deficit, but if they are repealed, it will mean a whole lot of revenue for the US treasury to use to pay down the deficit.

There is a good chance that these two issues will be very important during the upcoming presidential campaign and could make a huge difference as to how things progress after 2012 is over.

 

Spain Takes A Hit From Moody’s

Just as Moody’s threatened to assign a negative outlook to France in the near future, they decided that while they were at it, they might as well cut Spain’s rating a few notches while they were at it.

That is a slight exaggeration of course – the review of Spain begun at the end of July – but the two notch cut that Moody’s gave to Spain is no joke. Based on their detailed analysis, the high levels of debt in the corporate and banking sectors mean that in the very near future, there may be some funding stress that would start to damage their economy and financial system. They also said that if things continue to get worse in the Euro Zone, they could get cut a few more notches in the very near future.

This just highlights one of the main consequences of the lack of action taken by they EU when it comes to this whole situation. Now, the EU hasn’t really dealt with this kind of situation recently so they have no experience with it, but they really should have focused on getting the problems in these smaller European countries under control before they got too large and caused widespread chaos all over the world. Even now, they still seem to be dragging their feet and not getting a whole lot done. If nothing is done soon, we will all be wishing that we were in the position we are right now, because things could get a whole lot worse.

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