TODAY | October 16, 2013
>>> for more than two weeks you have been hearing the terms government shutdown and debt ceiling. if your eyes glazed over by now you're not alone but there's very real impacts to you.
>> deborah is a market analyst and brian is the ceo of capital advisors. good to see you here. people are like i don't get it. what does this mean to me? is the government really going to run out of money?
>> well, the debt ceiling is really the authorization for our country to pay it's bills. sometimes they have to borrow to pay those bills on that day3s bills. sometimes they have to borrow to pay those bills on that day3. they won't be able to do it on that day.
>> if you put your atm card in you can't withdraw money.
>> right. the mortgage is due and the kid wants something at school.
>> what happens tomorrow. we hope there say deal but maybe it won't be. is it the end of the world tomorrow? is it in a week? is it november 1st .
>> the polar icecaps will still be around. we'll wake up and things are good but there's a big web of destruction here. i always look at the debt ceiling. it's a glue that holds everything together. it's more than just a date. it could impact stock prices. it could impact how much you're paying on your credit car bills and how much you're paying on a house that you bought earlier in the year on the assumption that rates will be low forever.
>> people are holding off on house purchases because they're not sure what this is going to mean to them.
>> correct. absolutely. affo affordability would be great. that impacts publicly traded companies.
>> how will it affect credit cards ?
>> if what happens is the rates on bonds start to go up those interest rates in your credit cards will go up. even if you paid on time. if all the rates going up on the bonds because people are worried the government might not pay the interest payments, that could be a problem.
>> even if you have a fixed rate card ?
>> a lot of them are still pegged too the prime rate .
>> okay. 401(k) and pension plans?
>> you don't know what to do? do you take the money out? you're going to get hit with taxes and the fact that your investment is lower. i think you have to wait this out unfortunately. because your standard of living is eroding right in front of your face you're going to buy less. again, going back to this web of destruction, that's what it causes.
>> what about social security benefits? this worries a lot of people. there's big payments coming due for the federal government that they may not be able to make if this is broached.
>> we have the government shutdown . there's not as many people working in the offices right now. these payments are electronic. but willie you brought up the point. it's not october 17th that everybody is calling the doomsday date, it's november 1st . there's about $60 million worth of payments that go out that day. we have revenues coming in every day but what if we hit november 1st and the treasury goes wow we have 60 billion that has to go out but only 33 billion over here. our government is not set up to not pay.
>> would they stop making social security payments?
>> they say they don't have prioritizization but they do. the interest rate payments go out first and the mandatory payments like social security go out second.
>> unemployment payments?
>> they could be delayed. that's really the scary part is on november 1st , they may say we have the money but we need to trickle them out so they might be a couple of weeks delayed. someone living on a social security check two weeks is a disaster.
>> so with that, as 58 million people are having their social security checks delayed they're also worried about the medicare payments and starting to watch tv at home saying can i go to my health care provider . they have no check coming in and they're worried about their health and they emotionally close up.
>> you mentioned about the housing market . if you own a home right now it can be confusing. the rate changed in a way you didn't think it would. what about if you're looking to buy a home? what does this mean?
>> you probably have to put it off bauchltz the rates were low over the summer. they started to rise but now they're going to rise more. you're having to question couldn't you afford that home? and then ultimately if you can't afford it think about longer term. what if it goes on over the next five or six months. now you're in a bad position because your wages aren't growing.
>> with the government shutdown , if you're applying for a mortgage, you can't get your social security and income tax verified because the workers aren't there and the fha isn't ga guaranteeing new loans right now.
>> a lot to digest.
>> thank you so much.
>> in case you didn't have it circled on your calendar, today is national boss day . we knew that.
>> have you hugged your boss today.
>> big hugs to all of you guys.