Prepare for a crisis similar to 2008. Gina E. Wood, Director of Policy and Planning for Washington, D.C.-based Joint Center for Political and Economic Studies, maintains that “the problem with [Congress playing] these kinds of games of chicken is that sometimes they end in a bad crash even that is not what either side is planning. What happens next is scary and unknowable but will be bad for the economy.” Her view of the potential impact on consumers and entrepreneurs: If there is a default, there will be considerable financial market uncertainty, higher interest rates and possibly a repeat of the fears of financial crisis and economic collapse that motivated passage of TARP in late 2008. That’s bad for everyone. Even if things get resolved pretty quickly, evidence suggest that interest rates will remain somewhat higher than they would have been without a default adding additional headwinds to the economic recovery. A weaker economy and continued high joblessness will aggravate the problems that make it so hard for the typical African American household to accumulate much if any non-housing wealth and will make it harder to become or remain a homeowner.
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