Let’s take a look at what is happening in Europe these days to understand why it’s key that the United States finds a solution to the debt ceiling issue. Not only have some European banks recently failed a stress test, but last week there was news that Greek, Italian, Portuguese, and French “credit default swaps” (which are insurance policies against default) were trading at record levels. While the European Union is continuing to work to contain Europe’s debt problems and prevent a default in Greece, these events carry a very important lesson for the U.S.
Why? Because solving our debt ceiling debate and finding a long-term plan for lowering our deficit and being fiscally sound will raise confidence in our debt and help the U.S. keep its excellent AAA credit rating from the various credit rating firms like Moody’s and Standard and Poor’s. This will help investors continue to see the U.S. as a safe haven for their money, which is a key aspect of our continued economic recovery.
There was some good news last week for the housing sector, as June Housing Starts and Building Permits were both reported better than expected.
Political uncertainty caused volatility in the markets last week, which put pressure on the bond market and home loan rates.
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