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Business Unusual

Late Friday afternoon, Standard & Poor’s downgraded the debt rating of the United States from the absolute top rating of AAA to the next highest rating of AA+.  It’s not like we didn’t know it was coming.  One of the issues that we were facing as a country about to default on its debt for the first time in history was the possibility that our debt rating would be lowered and we would face consequences.  Instead of heeding that warning, our political leaders fought tooth and nail to the wire about how we were going to raise the debt ceiling.  We could have preserved our credit rating.

But in typical Washington fashion these days, nothing gets done without it first becoming a crisis.  It wasn’t like we had to apply for a credit increase.  We simply had to make a decision to say we now need to borrow X amount more money to keep paying our bills.  And the longer it took to raise that debit ceiling, the greater the chance that we would default.

Conservatives argued that President Obama and his administration were only fear mongering.  Too many politicians were approaching the issue from either a perspective of ignorance or an outright deception against facts.  Some politicians even argued that the credit rating of the United States meant nothing.  Incredibly, other politicians were arguing that it would be better if we did default.  And even more difficult to believe, one tea party fueled conservative politician introduced a bill to lower the debit limit of the United States guaranteeing a default.  All of this was happening as other politicians worked to keep what most rational people believed was a disaster at bay.  Thanks to the less than divine guidance of our immensely unwise politicians, we managed to damage our credit all by ourselves.

And now that we dared to cross the credit worthiness line, people want to point a critical finger at S&P saying the math that the agency used was wrong.  The agency’s calculation was off by two trillion dollars and that’s more than enough to justify America keeping its the triple A ranking.  Why listen to S&P now when their judgment during the creation and bust of the housing bubble was so poor?  What credibility does this agency have when it was giving all those financial institutions that faced default when the economy went into recession back when the global recession hit just a handful of years ago?  Where did the “poor” in Standard & Poor’s come from?

Be that all as it that may be, the bottom line is that it’s hard to point the finger at S&P for doing what we knew was coming down the pipe if we didn’t get our act together.  We pushed the issue right up to the final hour.  And even then, the agreement that our politicians managed to hashed out fell woefully short of what we needed.  The agreed upon package of cuts was a fraction the size needed and there were absolutely no increases in revenue.  Few outside the conservative community were happy with the deal, nor were many inside the group.  And as confirmation of the wide disapproval, the stock markets around the world have tanked like an ACME anvil.

And the primary fact that remains is that the American political system is so dysfunctional now that it is only a matter of time before our quarreling politicians make the catastrophic of mistake of pushing the issue beyond the safety limit.  There is too much to gain by obstruction and too much to lose by cooperation.  Compromise has become a dirty word.  In fact, some politicians risk their political careers by working out a deal with their opponents.  Any deal is a guaranteed defeat in some political districts.  Instead of being content to get a majority of their wishes, some people organize to throw voter tantrums because they didn’t get every single thing they wanted.

Politicians would rather shut down an entire government agency rather than work out a solution to keep people at work.  Politicians would rather see the loss of jobs and the further weakening of the economy before they would agree to funding a government program with a clear benefit to the public.  Who needs an Environmental Protection Agency or a Federal Aviation Administration or a Department of Education?  Even those these government entities employ thousands and protect millions, who needs them?  And if that’s not enough, according to the debt limit deal that was arranged a committee of twelve politicians from both sides of the Congress and from both parties are to be selected for the unenviable task of hammering out another trillion dollars of deficit savings and our political leaders have promised not to select anyone who might be willing to compromise core principles.  After all of this, do we really want to point the finger at Standard and Poor’s?

Anybody who thinks that the problem is the credit rating agency is really being disingenuous.  The outlook for the United States appears to be a very poor one if we continue with business this unusual.  The whole point of a divided government was to work on compromise and not the dysfunction that has become so popular in the past few years.  Anybody who wants to know what it would be like to invest in the American economy needs to be aware of the danger.  The S&P downgrade of America’s credit rating shouldn’t be attacked.  To do so is just a dysfunctional argument from people who refuse to address the real issue of our dysfunction.  Then again, in America foolish arguments of dysfunction has become business as usual.

Monday, August 8, 2011 - Posted by | Life, Thoughts | ,

1 Comment »

  1. It truly is a sad situation, from all angles. While watching your personal credit go down the flusher may be a wake-up call to watch your wallet, it seems that one could only hope 535 elected morons could ever hold such a reverence for maintaining our credit worthiness at all, nevermind spending habits regarding our cash on hand at any given moment. Afterall these are the same group of people, on al sides, that made the rule that you literally have to turn down the automatic pay raises, as a body, in order for them to not go through. Wish I had that awesome option at my place of employment, regardless of my job performance or approval rating.

    What’s sad is that you have democrats blaming republicans for this, and republicans blaming democrats for this. You have Mrs. Bachmann blaming our President for this, as though he sat down vetoing every budget and debt deal that came down the pike. Because quite frankly, regardless of your political stance, the POTUS whoever they may be, at any given time pretty much only holds that option of actual control and responsibility over such an issue. And of course the 535 morons could override the vetoes anytime they wished. Ultimately the only ones to blame are the legislative bodies that make up Congress.

    Personally, despite the sweeping potential problems associated with a credit rating downgrade, or even a default, might almost be a good thing. Maybe, just maybe, that might get those people thinking about what’s what and get with the program. And personally I think Congress would be the best place to start any cuts. Take away COLA raises, wage raises, etc. Tie it to their overall rating amongst the American people, allow individual members the option to turn down their own raises (if any), and limit these raises strictly to Presidential Election year ballots, instead of annually. Take away traveling privileges tied to additional taxpayer money. If they want to jetset around the country, try coach instead of first class, and make them take it out of their own pocket. If the legislative bodies in session refuse to bring about a balanced budget (to include feasible and real debt reduction measures that are in effect for the specified year…not down the road a few years) within the first month or two, then strip their pro-rated pay for the remainder of that fiscal year. And personally, for the morons who keep going for re-election in hopes of never leaving office prior to death… if you personally have a million bucks or more of personal wealth: You can serve for free if you feel its such an honor to perform your duties for the country. Afterall, its not like we arent already giving you pensions and healthcare for life even after you’re out.

    As for what would be lost in the event of government shutdown or default… we do have a list of what are essential functionaries (such as police, etc etc) that would still operate under some budget form. Im not sure I agree with you on the Department of Education. Ever since it became its own department, we’ve been slipping in the power rankings to other countries steadily. Hard to pinpoint the exact reasons for that, but I’m just saying their is a possibility of correlation there.

    Now obviously I’m not one who believes strictly spending cuts is the answer. I believe more revenue needs to be brought in. I might suggest a complete overhaul of our taxation system. I’m kind of partial to the Fair Tax idea, as it is consumer based, and while everyone pays the same percentage in taxes at the point of sale, there is a line of forgiveness for lower income families, and ultimately we also start seeing funding coming from all the blackmarket money that never sees the IRS for its cut. So ultimately you will still have the wealthy paying more, without much of a chance for getting a loophole on their new yacht and leer jet purchases.

    And of course back to the idea of cuts, we’d need less money if we didnt have government funding of a group of “researchers” who study “do cats really like pickles more than dogs” and “If I drop this stack of $100 bills the government gave me 20,000 of to find out if it will fall faster than the stockmarket did when Lehman Brothers collapsed” and of course my favorite study that I’d conduct: “do pampers reduce the smell of my kid’s poop more than other brands” and then these smart guys get published in some journal as though what they did meant something other than opportunities for more grants to ensure their jobs just a bit longer.

    Sorry for the long rant Brother P… I tend to get fussy when it comes to money and morons co-mingling, especially rich morons trying to tell me how money needs to be spent or not spent, while I’m being told my $20something thousand a year is plenty enough to live on even with my kids to support.

    Comment by mikelovell | Monday, August 8, 2011 | Reply

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