Can you believe it? S&P told the American government what it needed to do to keep its AAA rating and when our legislators didn't do it, they followed through with their warning. Wow, what a relevation, actions have consequences! It is kind of like a parent telling us not to touch the hot stove!
We now will have to pay the price for our legislators ignoring the warning. Will it immediately result in higher interest rates, will other countries stop investing in our debt, will this embolden those foreign leaders who wish to remove the US dollar as the currency of world trade, will the other rating agencies follow S&Ps, leadership? These are all unanswered questions, however, the answers will determine where the US goes from here.
The consequences of this lack of leadership by our national leaders will be rapid and probably more devastating than anyone can predict at this time. Take the worst result of each of the above questions and that will probably what happen. For instance:
--interest rates probably will jump 2% starting Monday making home mortgages less attractive further degrading the housing market and making credit card debt more expensive. Additionally, the interest the government has to pay will jump making the debt problem even worse.
--other countries, like China, will pull away from buying any additional debt from the US and will start selling off their existing holdings.
--there will be immediate calls for the removal of the greenback as the world's reserve currency to be replaced by a basket of other currencies. We can expect this next week.
--the other rating agencies probably will not jump onto the S&P bandwagon for one very chilling reason. One can expect a Justice Department/Congressional investigation into the downgrade by S&P within a couple weeks. (An Italian rating agency downgraded Italy's bonds and was raided by the national police this past week.)
At times when governmental leaders stop being leaders and become political hacks, these are the type of results that we get. When McCain calls Tea Party members, "hobbits" or when the Vice President of the United States calls them "terrorists", it shows how far away from leaders they all have become. It is not surprising that the world is concerned with the United States. The S&P downgrade is only a symptom of the problem, it is not the problem. We have no leaders!
We are now approaching a Y in the road. Do we take the left branch and continue business as normal or do we take "the road less travelled". My fear is we will take the easy way out, doing the same things and expecting different results. Instead, we should be "shocked" by the downgrade and make the necessary course corrections. Today on NBC, Lawrence O'Donnell made a sophmoric point by looking into the camera and saying "S&P is wrong." He wants the status quo and obviously does not understand the debt issue or he is a politician faking it as a newsman. We need to take S&Ps rating change as a wake up call. Our debt is killing our economy and our way of life.
Unless our leaders awaken or are replaced with individuals who will do what is in the best interests of this country (and not their own re-election), we can expect further downgrades and further degradation in the American lifestyle. Do we really want to be Greece or Argentina? I sure don't!
I propose that a National Commission of ten people be estabilished by Congress. Four of those on the commission would be regular citizens, average Joes and Janes who never have been involved in politics but have experience in running businesses. The Congressional Budget Office would have two members on the commission and the balance would be two Republicans and two Democrats. The goal of this group would be to come up with proposals what would reduce government spending immediately by 1 trillion and 1 trillion a year for the next ten years. A report would be required in three months. All programs would be on the table. If the commission could not decide on a plan, immediate 5% cuts in government spending would be mandated to occur on January 1, 2012 and each year thereafter. Strong medicine, yes. Necessary, definitely. Will it happen, probably not because it makes too much sense.
Congress would never give up so much control to a bunch of naive citizens. They would rather produce garbage bills like the Debt limit one that just passed Congress. And now we see the results of the trash that these "public servants" produce. Don't you think it is time that we let someone else run the government as it looks like these fools are not very good at it!
What do you think? Where are we heading? I want to hear from you.
We now will have to pay the price for our legislators ignoring the warning. Will it immediately result in higher interest rates, will other countries stop investing in our debt, will this embolden those foreign leaders who wish to remove the US dollar as the currency of world trade, will the other rating agencies follow S&Ps, leadership? These are all unanswered questions, however, the answers will determine where the US goes from here.
The consequences of this lack of leadership by our national leaders will be rapid and probably more devastating than anyone can predict at this time. Take the worst result of each of the above questions and that will probably what happen. For instance:
--interest rates probably will jump 2% starting Monday making home mortgages less attractive further degrading the housing market and making credit card debt more expensive. Additionally, the interest the government has to pay will jump making the debt problem even worse.
--other countries, like China, will pull away from buying any additional debt from the US and will start selling off their existing holdings.
--there will be immediate calls for the removal of the greenback as the world's reserve currency to be replaced by a basket of other currencies. We can expect this next week.
--the other rating agencies probably will not jump onto the S&P bandwagon for one very chilling reason. One can expect a Justice Department/Congressional investigation into the downgrade by S&P within a couple weeks. (An Italian rating agency downgraded Italy's bonds and was raided by the national police this past week.)
At times when governmental leaders stop being leaders and become political hacks, these are the type of results that we get. When McCain calls Tea Party members, "hobbits" or when the Vice President of the United States calls them "terrorists", it shows how far away from leaders they all have become. It is not surprising that the world is concerned with the United States. The S&P downgrade is only a symptom of the problem, it is not the problem. We have no leaders!
We are now approaching a Y in the road. Do we take the left branch and continue business as normal or do we take "the road less travelled". My fear is we will take the easy way out, doing the same things and expecting different results. Instead, we should be "shocked" by the downgrade and make the necessary course corrections. Today on NBC, Lawrence O'Donnell made a sophmoric point by looking into the camera and saying "S&P is wrong." He wants the status quo and obviously does not understand the debt issue or he is a politician faking it as a newsman. We need to take S&Ps rating change as a wake up call. Our debt is killing our economy and our way of life.
Unless our leaders awaken or are replaced with individuals who will do what is in the best interests of this country (and not their own re-election), we can expect further downgrades and further degradation in the American lifestyle. Do we really want to be Greece or Argentina? I sure don't!
I propose that a National Commission of ten people be estabilished by Congress. Four of those on the commission would be regular citizens, average Joes and Janes who never have been involved in politics but have experience in running businesses. The Congressional Budget Office would have two members on the commission and the balance would be two Republicans and two Democrats. The goal of this group would be to come up with proposals what would reduce government spending immediately by 1 trillion and 1 trillion a year for the next ten years. A report would be required in three months. All programs would be on the table. If the commission could not decide on a plan, immediate 5% cuts in government spending would be mandated to occur on January 1, 2012 and each year thereafter. Strong medicine, yes. Necessary, definitely. Will it happen, probably not because it makes too much sense.
Congress would never give up so much control to a bunch of naive citizens. They would rather produce garbage bills like the Debt limit one that just passed Congress. And now we see the results of the trash that these "public servants" produce. Don't you think it is time that we let someone else run the government as it looks like these fools are not very good at it!
What do you think? Where are we heading? I want to hear from you.
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