MIAMI (CBS4)- There has been much talk about the debt debate, and South Floridians have many questions about what happens if Congress doesn’t get a deal on the debt ceiling.
CBS4’s Joan Murray spoke with Barry University Andreas School of Business professor of Economics and Finance, Stephen Morrell. Morrell said, “We don’t know because we’ve never experienced this before.”
“If Tuesday gets here and there’s no deal, the best case scenario is Social Security gets mailed out, government doesn’t default and we come out with changes on the way government works in Washington,” he said.
There will be some changes.
“Our credit rating would be slashed, just a question of how much,” he said. “It would raise our borrowing costs in the future.”
And what about our savings?
“It may be time to re-balance your 401K, taking what you have if there is a default to buy some equities when things are down,” said financial advisor Ben Tobias.
Murray also asked Tobias what to do if consumers are looking at buying a car or home.
“Interest rates are as low as I’ve seen them, and that’s a reason to buy,” he said. “If you have a job, that’s a reason to do it.
But Tobias explains, “You might find if the default happens that borrowing may be harder.”
“What I have been seeing is people who are credit-worthy are getting mortgages.”