Us debt crisis


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Us debt crisis

  2. 2. US Debt Issue <ul><li>US has been living beyond its means. </li></ul><ul><li>The federal govt. has spent more money than it has taken in during the most of the past for decades </li></ul><ul><li>Putting its credit rating at risk </li></ul><ul><li>National debate on the role of obama’s calculation and its purpose </li></ul>
  3. 3. US Debit Issue <ul><li>History of US </li></ul><ul><li>Current status of US </li></ul><ul><li>Causes of the US debit issue </li></ul><ul><li>Impact of the debit issue </li></ul><ul><li>Future stratergies </li></ul>
  4. 4. History <ul><li>USA has been a strong economy. </li></ul><ul><li>Dollar was the most sought after currency in the world. </li></ul><ul><li>The long term credit rating of USA was AAA. </li></ul><ul><li>What is the debt ceiling ? </li></ul><ul><li>When there is a budget deficit , the only way that the shortfall can be paid off is by issuing of debt instruments. Under the federal law of US, the amount that the govt. can borrow is limited by the debt ceiling, which can only be increased with a vote by congress. </li></ul>
  5. 5. History… <ul><li>Congress instituted the concept of “debt ceiling”in 1917in order to provide more flexibility to finance the US involvement in World War I, Since then, the Treasury may borrow any amount needed as long as it keeps the total at or below the authorized ceiling. The congress must enact specific legislation and the President must sign it into law. </li></ul><ul><li>The US has had public debt since its inception. Debts incurred during the   American Revolutionary War. </li></ul><ul><li>Every president since Harry Truman has added to the national debt. </li></ul><ul><li>The debt ceiling has been raised 74 times since March 1962 </li></ul>
  6. 6. Debt Crisis The Current Scenario <ul><li>  </li></ul><ul><li>According to Treasury, the US government would run out of cash to pay all its bills on August 2011, which became the deadline to increase the debt ceiling.  </li></ul><ul><li>As per Wall Street analysts, the US Treasury would not be able borrow from the capital markets after August 2, but still would have enough incoming cash to meet its obligations until August 15. </li></ul><ul><li>Analysts also predicted that Treasury would be able to roll over the $90 billion in US debt that matured on August 4, and gain additional time to avert the crisis </li></ul>
  7. 7. Current Scenario… <ul><li>The immediate crisis ended on July 31, 2011, when a complex deal was reached that raised the debt ceiling and reduced future government spending. However, similar debates are anticipated for the 2012 and 2013 budget. </li></ul><ul><li>After the legislation was passed by both the House and Senate, President Barack Obama signed the Budget Control Act of 2011 into law on August 2, the day of the deadline . </li></ul>
  8. 8. Reasons of Debt Crisis
  9. 9. Reasons… <ul><li>Budget deficit - The federal government budget deficit or surplus is the cash difference between government revenue and spending(Expenditure) ignoring intra-governmental transfers. </li></ul><ul><li>Political climate -The disagreement between the Republicans and the Democrates. </li></ul><ul><li>Standard and Poor's downgraded the USA sovereign credit rating by one notch from AAA to AA+ i.e a negative . </li></ul><ul><li>SOVEREIGN BONDS- Bonds issued by national governments in foreign currencies. </li></ul><ul><li>The Federal Government wants the borrowing limit to increase to back the liability or all its Obligations but the Republicans first wants the Spending Cuts. </li></ul><ul><li>The US national public debt (Public borrowing) which is $14.34 Trillion. </li></ul>
  10. 10. Impact Of Debt Crisis <ul><li>World </li></ul><ul><li>Adversely affecting the countries relying on exports to US </li></ul><ul><li>Increase in Gold price </li></ul><ul><li>Fluctuations in stock Market </li></ul><ul><li>India </li></ul><ul><li>Increase in Unemployment </li></ul><ul><li>Loss by exporters-software </li></ul><ul><li>Fluctuations in stock market </li></ul>
  11. 11. Future strategies <ul><li>Expenses cutting down </li></ul><ul><li>No tax increase </li></ul><ul><li>Decrease in military expenses </li></ul><ul><li>Reconstructing the economy </li></ul><ul><li>Increase in employment </li></ul><ul><li>Cutting down the inflation </li></ul>
  12. 12. Thank You! <ul><li>Joseph Mathew - P11127 </li></ul><ul><li>Nikita A Thomas - P11140 </li></ul><ul><li>Abhilash K - P11103 </li></ul><ul><li>Pooja Tiwari – P11143 </li></ul><ul><li>Ria K Joseph – P11147 </li></ul><ul><li>Anoop MR – P10118 </li></ul>