Guiding consumers since 2009

US Congress passes debt deal

By Staff Writer
US Congress passed a bill to re-open the government and raise the federal debt limit, with hours to spare before the nation risked default.
 
According to reports, the Democrat-controlled Senate passed the bill by 81 votes to 18 and the Republican-controlled House of Representatives by 285 votes to 144. It came hours before the deadline to raise the $16.7 trillion limit.
 
Rob Spanjaard, director at REZCO Asset Management, who is currently on a visit to the US told Justmoney that until yesterday the crisis was slow moving and mainly affected tourist destinations such as museums and national treasures like the Statue of Liberty.

Spanjaard initially predicted that the two parties would come to a compromise.
 
How would a default affect South Africa?
 
With the US in shutdown and the debt ceiling deadline (17 October 2013) looming there were grave fears over how this scenario could impact the rest of the global economy.
 
South Africa would not have been immune to the repercussions. Spanjaard said it could have been a world-wide crisis that would have impacted on South Africa’s already volatile rand.
 
The rand could’ve depreciated
 
“The economic crisis of 2008 showed us how inter-related the world’s economy is. Had the debt limit not been resolved South Africa’s Rand value could have dropped by 20%,” said Spanjaard. 
 
Laura Campbell, economist at Econometrix, said the weakening Rand has already had a significant impact on the cost of vehicles.
 
“With the rand weakening even more, we would see a further rise in the cost to producers. The only factor keeping retailers from raising prices is the fact that South Africa has a soft demand in goods,” said Campbell.
 
How things stand now
 
According to a BBC report, the White House budget office said federal workers should return to work today.
 
But this new deal offers only a temporary solution as the US will have to address the debt ceiling again in February next year. With Republicans and Democrats locking heads over budgetary concerns the world will again have to hold its breath as the two parties thrash things out. 
 
However, Spanjaard said it shouldn’t have the same impact as what took place with the impasse between the US Congress and President Obama.
 
“I think the default risk has cost the Republicans a lot of votes and they won’t try something like that again,” he said.  

Recent Articles

Featured How are you taxed on your retrenchment package?

Unemployment is one of the biggest problems in South Africa. The emergence of the Covid-19 pandemic has exacerbated the situation with a lot of companies retrenching their employees.  When retrenched, you’ll receive a retrenchment package, but do you know how much tax you’re liable for?

Car repossessed – don’t be taken for a ride

When the country is facing an economic downturn, chances are your finances will feel the pinch. This can lead you to make bad financial decisions such as skipping your vehicle payments. But every decision has consequences and if you don’t pay your instalment, the bank will repossess your car. But what can you do when this happens?

 

Why you should consider gap cover

Your medical aid should protect you from incurring large medical bills when you’re sick. But what if your plan doesn’t cover the full cost of your medical expenses? We got in touch with insurance experts to find out whether gap cover is worth having.

Debt relief - What is your bank offering?

Going through a financial crisis is stressful whether it be as a result of losing your job, being short-paid, having to fork out towards an emergency payment, or finding yourself in the midst of a global pandemic. This is especially taxing if you have a debt to service. It is against this backdrop that banks are increasingly offering payment holidays. Justmoney looks at the various debt relief options available to you from the big five banks.

Deals

Premier Hotel and Resorts Special For Senior Citizens

Price: Available on request
When: Daily
Where: Nationwide

The President hotel 10% discount for locals

Price: Available on request
When: Until 31 October 2020
Where: Cape Town

Get 40% off when you book your stay at Colosseum Hotel

Price: Available on request
When: Until 13 December
Where: Cape Town


Latest Guide

Guide to debt rehabilitation solutions