Columbia, SC (WLTX) -- In this week's Money Monday segment, Financial Planner Laura Scharr-Bykowsky takes a look at how the United States Debt Crisis, has caused reaction across the world. Sharr- Bykowsky also explains what may be happening on Wall Street.
What precipitated the sudden drop in the market last week and how should you respond?
She says, "Our recovery is facing significant headwinds, namely the European debt crisis, recent weak economic data, and a lack of certainty with respect to the structure of our future tax code, entitlement system and healthcare system." More Information: Visit Scharr-Bykowsky's Official Website
Scharr-Bykowsky also says, "The real trigger for the decline last week was the debt crisis in Europe. There is a concern that what is happening in Greece, and now Portugal, and Ireland is spreading to Italy and Spain. Overall confidence that the European Central Bank can handle this is waning. This has financial markets across the globe on edge."
Add to the mix a first time ever downgrade by the S&P rating agency of US Treasury debt. Related Link: Standard and Poor's Rating Action on U.S. and Related Material
The expert says the country faces tough problems that require tough solutions; yet, if other countries cut spending too rapidly to combat their deficits, it will undermine economic growth.
Ultimately, Scharr-Bykowsky says "The problem needs to be solved in "Goldilocks" manner-spending cuts, entitlement and tax reform that are not so aggressive as to undermine the recovery but meaningful reform that is not so watered down and or so far out into the future that it is rendered meaningless. Clearly, the days of kicking this can down the road for Europe and America are long over."