Monday, August 08, 2011

The Downgrade SHOULD Be A Wake Up Call

The possibility of a down grade in the U.S. credit rating has been like a ticking bomb for months.  It has been downgraded long before now by others than S&P but no one paid much attention to it.  At least it wasn't widely reported in the press.

Now all of a sudden the reality has hit and what do we do?  We look for someone to blame.  It's the Tea Party's fault.  It's the Democrats, the Republicans, Obama's  and of course George Bush.  Pick one.  How about all of the above!

So what do we do.  We attack Standard and Poor.  They are immature and foolish.  Their numbers are wrong.  Of course they've never been wrong before as long as they gave us the AAA rating. And they warned us. As have the others.  Moody's and Fitch. The market answered by taking a nose dive even though it was only one of three rating agencies.  But as I pointed out the other two haven't given us a pass.

So what's it all about?  We spend more than we take in and we've passed our limit.  We've borrowed so much that default looms unless we borrow even more and the lenders are saying, "Awww, I don't know how they're ever going to get ahead enough to repay us.  So we'll charge them higher interest to protect ourselves."  Of course that's a double edged sword and if we did default, they'd be out.  Debt forgiveness?  I wouldn't hold my breath.

When you boil down all the rhetoric, what we're being told is the rating agencies see no sign that we're able to get beyond our partisan bickering to put forth a budget that shows a plan for the way back.  Heck, the Democrats haven't put out a budget for two years. There is a law against that.  So what?

The President rejects everything that's been put forward whether it was good or bad plus offering no guidance on how he sees a fix.  The rest of the world is  now wondering where it can go for a stable currency.  Switzerland comes to mind.

So the President is going to move on to jobs.  I've got a clue for him.  With the economy in the tank there will be no jobs.  Tea Party take note.  You took us to the brink, making us look like fools and got nothing for it.  Democrats take note.  Put out a budget.  Republicans take note. Work with the Democrats ~ and vice versa including the Tea Party.  Of course being on vacation for the month we've heard little from you.

We've not heard much from the candidates either.  But Standard and Poor is hearing something loud and clear.  We've no act to get together.  I hate to say we deserve what's happening, but we're the ones who put the people in office.  Strange, isn't it, that we elected an administration and Congress who are deaf, dumb and blind.

A wake up call is only helpful if it's heard, the issue talked about as a national problem rather than a partisan pain in the neck and seen in the first place.  I fear that alarm may be a silent one.   The gang of twelve yet to be appointed will probably have a great deal to do with what Moody's and Fitch decide in the not too distant future.  I've heard little optimism from financial experts.  What an endorsement of our government!

What happens if they fail?  I fear Nancy Pelosi's dramatic statement about saving life on the planet as we know it may become a very haunting refrain.

1 comment:

Margie's Musings said...

Politicians are the only people in the world who create problems and then campaign against them.

Have you ever wondered, if both the Democrats and the Republicans are against deficits, WHY do we have deficits?

Have you ever wondered, if all the politicians are against inflation and high taxes, WHY do we have inflation and high taxes?

You and I don't propose a federal budget. The President does.

You and I don't have the Constitutional authority to vote on appropriations. The House of Representatives does.

You and I don't write the tax code, Congress does.

You and I don't set fiscal policy, Congress does.

You and I don't control monetary policy, the Federal Reserve Bank does.

One hundred senators, 435 congressmen, one President, and nine Supreme Court justices equates to 545 human beings out of the 300 million are directly, legally, morally, and individually responsible for the domestic problems that plague this country.