Debt Crisis

A debt crisis occurs when a country is unable to repay its loans. Because it is overarching, a debt crisis is indicative of the overall heath of the national economy, international loans, and budgeting. When a country is faced with a debt crisis, it cannot pay off its financial obligations and must seek out assistance.

The United States faced a debt crisis on the heels of the housing market collapse and overall weakening economy. In December 2007, the U.S. entered into the Great Recession—and it lasted for 18 months. Over that time, the economy ground to a halt; businesses and individuals began to default on loans and banks saw their balance sheets shrink. To stave off further economic shock, banks made it more difficult to borrow, as cutting off liquidity means businesses cannot invest in growth and individuals cannot consumer.

To stave off an all-out economic collapse, the Federal Reserve stepped in with its first of three rounds of quantitative easing in November 2008. Since that time, the Federal Reserve has printed over $3.0 trillion and the U.S. national debt has soared from roughly $9.0 trillion to $18.0 trillion. The U.S. continues to run a budget deficit and does not expect to run a surplus until 2024; this means the U.S. debt crisis will not be under control for another decade.


CAD/USD Exchange Rate: Canadian Dollar Forecast Bearish in 2016 Although the Canadian dollar was virtually on par with the U.S. dollar just two years ago, a handful of events have decimated the loonie since. Low commodity prices are threatening to…

Terrible news for Europe has dominated headlines this year, dragging down indices like the EURO STOXX 50 Index and the Deutsche Boerse AG Index. The stare-down between Greece and its creditors drained nearly all the life out of European stocks,…

Wall Street opened lower on Wednesday, July 8, on worries over Chinese financial instability and Greece’s debt crisis remaining unsolved. The main Chinese index, the Shanghai Composite, plunged nearly 30% from mid-June. On Wednesday, the Shanghai Index dropped by 6.75%.…

Wall Street opened flat on Tuesday, July 7th, as talks between Greece and its creditors resumed. The U.S. trade deficit widened in May, reflecting concerns over weak global demand. European stocks continue to slide while the euro hit a five-week…

Wall Street opened sharply lower on Monday July 6, 2015, as Greek people rejected the bailout package by creditors on Sunday, putting the euro on edge. European stock markets plunged as Greece’s exit from the eurozone seems to be likely.…

Wall Street opened slightly higher on Thursday, July 2nd, as job growth slowed down in June, lowering the probability that the Federal Reserve will raise the interest rate this year. European stock markets traded lower and the mood was one…

Wall Street opened higher after suffering from the worst day of the year on Monday, June 29th. Eurozone stocks recovered after a devastating day on Tuesday but remained cautious as Greece moves towards default on a debt payment to the…

Over the past few years, the U.S. national debt has increased drastically since the financial crisis. To give some perspective, since President Obama has taken office, U.S. public debt has jumped by $7.0 trillion. (Source: Committee Responsible Federal Budget, May…

With the U.S. government forecast to incur budget deficits year-over-year through to 2025, our rising national debt is turning into a debt crisis that will have long-term negative effects on our economy and currency valuation. In particular, two ticking debt…

This past Friday, we got news of Greece’s debt extension. The headline at the Financial Post said it all: “Greece and its EU paymasters reach accord to keep bailout funds flowing for four months.” (Source: Financial Post, February 20, 2014.)…

On the surface, today’s jobs market report looks good… 195,000 jobs were created in the U.S. economy during the month of June, with the “official” unemployment rate for the month sitting at 7.6%, unchanged from May. (Source: Bureau of Labor…

While cutting the growth outlook of the global economy, Chief Economist of the International Monetary Fund (IMF) Olivier Blanchard said yesterday, “…the main challenge is very much in Europe.” (Source: “IMF Cuts Global Growth Outlook as Europe Demand Urged,” Bloomberg,…

Another crisis looming in the air... Student debt is going to be the next big hurdle to deal with in the U.S.’s economic recovery. Total student loan debt currently stands very close to $1.0 trillion and defaults on these loans…

In the end, after weeks of hearing about the fiscal cliff, it was over. Taxes on rich Americans went up, and spending was untouched. But guess what? It doesn’t matter…it makes no difference to America’s debt crisis! Raising the tax…