Last week ended with Speaker Boehner "walking out" on
meetings with President Obama, signaling that we are no closer to solving the
rapidly escalating economic crisis of raising our country’s debt ceiling than
we were a while ago – and time is now officially running out. Meanwhile Europe seems to have agreed upon a
bailout of Greece, and some help for others of the P.I.G.S. countries, although
Moody’s downgrading of Greece’s debt is a bad sign.
We shall all now have time to see whether the Euro really is
like having a first class ticket on the Titanic, as some have now said –
Germany is on the same Euro as the weakest of the EU members – when that plane
crashes, first class passengers as well as those crammed in the back by the
bathrooms and flight attendant kitchens, will all hit the same mountainside
within microseconds of one another.
The mountainside that the US is about to drive headlong into
at full speed on or about August 2 is a whole lot closer. As this day of reckoning approaches ever
closer, we are now coming dangerously close to doing permanent and lasting
economic harm in ways that those who have irresponsibly said ‘Bring It On,’
when reminded that time has almost run out on the days of our nation’s good
credit rating, cannot even begin to imagine.
How does 20% unemployment, skyrocketing interest rates, and adding
billions to our national debt for additional interest due to destroying our
nation’s AAA credit rating, all sound, for starters?!?
Anybody who believes that we are not looking over the edge
of the economic cliff that we almost
drove off back in the Fall of 2008, is either delusional or a nihilist with a
real urge to destroy our economy, and perhaps that of the world to see what
comes next. Is that said too
strongly? If anything, it may be too
mild.
We are about to open the proverbial barn door to let our
horses escape – people will look back on this period and wonder – ‘what on earth
were they thinking?!?’ The rupture that
not increasing our debt ceiling will surely produce, both to our nation’s
economic well being and to our credit standing with the world’s investors
(including the largest consumers of US Treasury paper), some of which is
already in play according to statements from two of the world’s leading credit
rating agencies, cannot be overstated.
Anybody who believes this is ‘crying wolf,’ or an
exaggeration, is not paying attention very well. Last, but not least, anybody who believes
that intentionally defaulting on our
national debt is somehow a good thing, is truly making the mistake of a
lifetime.
When these horses escape the barn, all remaining bets are
off – threats posed by the urgent need to understand that the potential
implications of a national credit default are getting more real by the day, and
it’s cousin, the rule of unintended consequences, cannot be overstated.
For one thing, many major transactions in the world economy,
from money market funds to security for real estate transfers, are backed by
and grounded in treasury paper, the rock solid, never-say-die, truly safest of
all investments. Pulling out the
treasury paper undergirding from these major transactions, causing them to
unwind, crash and burn, could destroy countless businesses, de-stabilize more
complex situations than can now be imagined, and is the moral equivalent of
melting down Fort Knox and it’s gold supply to use for dipping cheap dime-store
costume jewelry. It just makes no sense.
Our national legislature is elected to govern this
country. They are fiduciaries, like
trustees, of our best interests. For a
segment of this elected legislature to force a voluntary default, thereby
destroying our nation’s credit rating less than three short years after that
fateful Fall of 2008, when we got so close to the edge, is a breach of their
solemn duties to their constituents – even those constituents who are so
foolhardy as to be egging those same legislators into this hitherto believed impossibly
crazy posture.
But, there they stand, blocking the door to progress or
compromise, smugly congratulating themselves on their stubbornness, and
publicly proclaiming that our nation’s legislators are actually contemplating
NOT making good on our nation’s debts, for the first time since our nation was
created back in the latter 18th Century.
Our once proud nation took until Andrew Jackson’s presidency
to finally pay off its debt from the Revolutionary War, and for an equally
proud moment, we were debt free early in our history. The Civil War debt was also paid off, as was
WWI and WWII, and after the latter, via the Marshall Plan, we single-handedly
re-financed and economically re-launched a broken, war-torn Europe. And now, they want to throw it all away, to
make a point about spending and keeping taxes at an absolute minimum . . .
We get the point; but this exercise in ‘throwing the baby
out with the bathwater’ is coming dangerously close to doing permanent and
devastating harm to our nation’s fragile and still recovering economy
(recovering from the worst Recession since the 1930’s Depression), to say
nothing of devastating even more of this country’s already beleaguered middle
class, many of whom are literally hanging on at this point, coping with
foreclosures or trying to avoid one, paying off student loans, educating their
children, and financing their own healthcare.
Now is not the time to drive our
economy off a cliff to make a point . . .