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Local financial experts weigh-in on possible default

Reported by: Wayne Hereford
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Updated: 10/16/2013 9:32 pm
TUPELO, Miss. (WTVA)-- News spread quickly when it was announced Wednesday afternoon that the Senate had approved a deal to end the partial government shutdown and avoid a default on the nation's debt.

The government has until Thursday to raise the country's debt ceiling, or it will no longer have the authority to borrow to pay its debts.

Local financial experts say that would be problematic.
"The treasury won't exactly run out of money tommorow. They will just exhaust their ability to buy more funds. So, they'll move to a cash-on-hand basis which is somewhat dangerous. It questions the credit of the United States," said John Oxford of the Renasant Bank.

Since the United States is still considered the rock of the world's credit industry, Oxford says, questions about treasury bonds and securities hurts the country's reputation in the global marketplace.

And just like for working north Mississippians, experts say when the federal government dafaults on its payments, many things could wind up not getting paid like Social Security. 

And then there's the finanical markets which one expert says would react negatively.

"Our debt is considered the safest debt in the world," said Tupelo financial planner Scott Reed.

"If Fitch and Moody downgrades us from Triple A to Double A it would be an embarrasing thing. It would be a terrible thing. But, we would still be the safest Double A investment you've ever seen in your life," Reed continued.

But, Reed admits that such last-minute congressional deals to avoid a government default is not the best way to do business in the long run.

One Tupelo bank CEO says managing the government's money should be like managing money at home. But, he says what the government is doing now is what he calls management by crisis.

"And, that's what we've done. We've fabricated a crisis. They've got this crisis in front of us. We need to stop kicking the can and do something," said Dan Rollins the CEO of Bancorpsouth.
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