Five Takeaways from the Debt-Ceiling Debate

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U.S. Capitol BuildingAs the debt-ceiling discussion winds down in Washington and everyone laments over the meaning and mutual downside of compromise, our attention should start to turn to a more frightening problem -- the economy is not growing.

Sure, default is off the table now. But the backdrop is negative, and all the hope in the world doesn't change the math. As Jim Cramer of CNBC says, "Hope is never a strategy."

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The real problem is demand. After all, if you don't have a job, you're not buying much. And the only real way for the country to solve this problem is to grow the economy.

In the meantime, those who are weathering the storm best are those who have saved along the way. You can never go wrong with self-control. I hope that one person with that mindset lives under your roof and it's now giving you the comfort to ride out these turbulent times.






In listening around the clock to CNBC, MSNBC, CNN and others, here are -- in my mind -- the five key takeaways from the debt debate:

#1. Cash is king: At DailyFinance we often hear from people looking to earn more interest on their savings. But here's the key: you have savings. What an enviable position to be in. For every year you lived in the less-expensive apartment or neighborhood; for every month you drove the car that wasn't as luxurious as the one in the next lane; for every season you spent more time reviewing your personal finances than planning your family vacation, you've earned a better night's sleep now. The sons and daughters of Depression-era parents seem to inherently get this, but the culture of saving has been largely lost on subsequent generations, many of whom are experiencing a pretty steep learning curve now.

PewResearchCenter | The Washington Post#2. Ridiculous: According to a new Pew poll in The Washington Post, the debt-ceiling debacle has damaged political reputations. "Ridiculous" is the word that comes most frequently to mind when describing the charades in the capitol. This has given Republicans an opening. Mitt Romney was notably absent or -- in a Mittness Protection Program as some have deemed -- during the discussions, but the incredibly telegenic Margaret Hoover was everywhere. He should hire her immediately for his campaign.

#3. Leave us alone: Companies are looking for clarity. They want the space to make decisions, especially when it comes to their most significant cost -- personnel. We recently spoke with Brian Hamilton, CEO of financial-analysis firm Sageworks, about small businesses' hesitancy to hire full-time workers. The overwhelming sentiment about government intervention in the economy is "leave us alone," he says.

#4. Their house is not like our house: Here's the inverse scenario, which suggests that the government should ramp up the stimulus a la World War II. Did Obama underdo it? What should a re-do look like, especially when you consider that his house is not like our house. As Rana Foroohar of Time explains, the president may have to spend his way to growth -- following Keynesian economics -- while, for regular U.S. households, spending would be reckless. It turns out, the simplistic argument that "you have to balance your budget, they should have to balance theirs" isn't really all that relevant.

#5. It's not over till it's over:
Even after the debt deal, a downgrade is still possible. If that happens, we're in even more trouble, and so is Obama.
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