EE.UU. IN BANKRUPTCY ?

Published in El Nuevo Herald on June 30, 2011. (It is one of the first written opinions alerting people about this dangerous situation)

If by August 2 is not reached a bipartisan agreement in Congress, the Treasury Department will  declare the country's inability to pay its debts.
The Republicans insist on reducing current expenditures by $ 2 trillion and not raise taxes on wealthier class. Under these parameters, debt and the deficit will grow further beyond its highest level in the last 60 years. As a macabre solution, the financial geniuses of Wall Street are offering papers with up to five years protection against default.
In practice, the default is translated as a real catastrophe for the economy, that in the beginning could stop paying pensioners and soldiers, and later to health care (Medicaid-Medicare). To make matters worse, investment banks have threatened to stop selling bonds in the market if it came to default.
The former Director of the International Monetary Fund, Dominique Staruss-Kahn, recently accused of rape in New York, had a plan consisting of two types of dollars, one for U.S. domestic consumption and another external with very favorable exchange rate, while taxing the holders of those dollars overseas. So debts will depreciate.

Probably will have to reach an agreement before the August 2 to avoid default. This agreement will provide  raising the debt ceiling above $ 14.3 billion and paying interest payments of $ 250 billion for only six months.
This could affect the U.S. credit rating internationally making even more expensive  this debt financing.
If we want to save our country, the economic model we know today can not continue. Private enterprise has to offer jobs and banks have to offer loans because the sacrifice should be for all of us, like it or not.

BENJAMIN F. DeYURRE
Miami

DEBT & CREDIT

                                          Published in El Nuevo Herald on March 18, 2011

The economic crisis we face in the U.S. for the past three years has, in addition to some supporting actors, two main actors: banks and credit bureaus.
As a result of the housing bubble, many consumers assumed impossible to meet financial commitments once the property returned to a value even smaller than the original. To avoid foreclosure, consumers chose to safeguard all your home, delaying other payments such as automobile and credit cards. This results in a severe penalty of the credit bureaus, which drastically reduced the rating of these consumers, severely limiting their access to new credits.
The banks, following the dictates of the credit bureaus, reduced its portfolio of new loans by 90%. Despite new technologies and a broader financial spectrum, many bank executives came to a fantastic solution: auto given larges bond. This came up with a penalty to charge consumers who cashed a check in their offices and clients who did not maintain a certain minimum balance in their current accounts.

Some bank executives, brazenly, have argued that many customers are now asking for changes to their loans because their home price declined, but when the value of their home has doubled, no customer returned some of their profits to the bank. With this in mind,  is very hard to overcome the crisis.
Politicians should take notice of this matter by legislating for the three major credit bureaus do not penalize consumers who have been affected by the crisis. Instead, they would turn to bank financing for these special cases. Also, the government should increase its guarantee to underwrite the new credits. And it should create an oversight committee to regulate the activity of the entities that rarely collaborate on economic recovery.

BENJAMIN F. DeYURRE

Miami