Can The Federal Government File For Bankruptcy?

02 Mar Can The Federal Government File For Bankruptcy?

How good is the Federal Government’s credit rating?  This is a question of great concern right now because President Obama and his administration have indicated that they are open to the possibility of another stimulus package.  In other words, they are looking to borrow another $800 plus billion dollars to help stimulate the economy.  Additionally, we will be running huge budget deficits each year for the next couple of years just to pay for what we have committed ourselves to in the past.  In other words, we have committed more money than we take in.  My questions are:

1.  How Good is the Federal Government’s Credit?  2.  How much can we keep borrowing until we are cut off?  3.  If we exceed a certain amount, are our interest rates going to go up?  4.  If so, will our creditors shut off our credit lines?  5.  When all is said and done, how are we ever going to pay all of this money back to our creditors? 6.  What do we have to offer our creditors if we default?

This and other interesting questions have been swirling in my mind?  If the Federal Government’s credit rating dips below a certain level, do the Chinese and Japanese bond holders have a universal default clause that will kick in and raise our interest rates up to 29.9% ?  That would really hurt the American people.  

How will we ever pay all of this back?  Well, that question is easily answered.  Rich people will shoulder the burden of paying this money back.  If you make over $250,000.00 per year, hold onto your wallet because the Federal Government it going to pick your pocket this year.

Last week, the Federal Government increased its holdings in Citigroup.  This morning I heard that the Federal Government is considering another $30 billion to AIG, and another $750 billion to the banks.  Holy Moly.  

We don’t have to worry about whether the Federal Government will file for Bankruptcy.  It is already bankrupt, morally, ethically, socially and fiscally, any other way you look at it.

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Carmen Dellutri is a proud member of the Florida Bar, and he is a Board Certified Consumer Bankruptcy Attorney, Certified by the American Board of Certification. He practices in the areas of Consumer Bankruptcy and Plaintiff's Personal Injury. He is the principal attorney at The Dellutri Law Group, P.A. The firm supports many charitable and civic causes by donating time and much needed capital to our community. Mr. Dellutri and the other attorneys in the firm routinely speak to students of all ages about various legal and societal issues.
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