Yesterday was a bad day for America. Not just Wall Street, but the whole country. It was mega-bad. It could be a second recession all over again kind of bad. All you know is that the stock prices fell, and that the nations credit rating fell.
Allow the Czar to put this into a more realistic light. For the first time in history, the United States lost its AAA credit rating (most stable investment possible) for a negative rating of A-1+ This is like getting a report card that saw your grade drop from an A+ to
The Washington Post blames Republicans, and mentions that the President is reassuring everybody that S&P does not know as much about debt and bond ratings as does, say, a college law professor who never owned a business.
The actual S&P press release puts things in a carefully worded light. It says that the United States is not a safe bet due to its -out-of-control spending and inability to come to any bipartisan compromise.
The press release further adds that the President has a vague plan to raise taxes and cut spending on defense. The release also adds that Paul Ryan has produced a plan that restructures taxes, makes significant improvements to entitlements, and cuts spending everywhere but on defense.
However, the press release says that until leadership sets aside politics, the United States has a miserable outlook ahead of it and can no longer be trusted to pay its bills. Other than that, Standard & Poors makes no judgments.
No judgments? Well, okay. But the leadership here is Barack Obama, not Paul Ryan. And not only have Republicans continuously offered to meet with the president to hammer out a single agreement, but the press release was withheld until after the Presidents budget speech last week.
Not that they are passing judgment as to what triggered the disastrous credit rating. But they knew for months about the Ryan Roadmap and had no comment. No, they were waiting to see if the President would provide hope and change, or simply be Candidate Obama. He made his choice; S&P made theirs.
So here is why this is bad. The credit rating basically says that America cannot be relied on as a solvent operation. As a result, borrowing costs for businesses and homeowners will rise, penalizing those few who are able to help grow the economy. The value of the dollar is certain to drop, and inflation is going up. Gasoline is now going to hit $5 a gallon. This will weaken the dollar internationally (although relax: the dollar will remain the worlds reserve currency because nothing has proven to be a stronger candidate), and already people are bailing on treasuries. This never happened to Carter.
None of this is good, and the recession will be with us right into election time. Yep: just when Obama really needed an economic upturn, he is going to give the GOP a massive public relations bonanza. Not that any of us will enjoy the immediate symptoms. Not when you see gas stations showing 87 octane at $4.899 a gallon.
Yesterday and today, the Obama camps are racing around each other to explain that this is really a good thing, or not a bad thing, and Tim Geithner is asking co-workers if he might get fired.
Many people are referring to the event as a political Rorschach: you will see in this what you wish to see. Some see it as an argument to raise the debt ceiling. Others see it as a clear endorsement of Paul Ryan. Whatever it may be, it certainly is a response to the Presidents speech. And you may make your own judgment.
Божію Поспѣшествующею Милостію Мы, Дима Грозный Императоръ и Самодержецъ Всероссiйскiй, цѣсарь Московскiй. The Czar was born in the steppes of Russia in 1267, and was cheated out of total control of all Russia upon the death of Boris Mikhailovich, who replaced Alexander Yaroslav Nevsky in 1263. However, in 1283, our Czar was passed over due to a clerical error and the rule of all Russia went to his second cousin Daniil (Даниил Александрович), whom Czar still resents. As a half-hearted apology, the Czar was awarded control over Muscovy, inconveniently located 5,000 miles away just outside Chicago. He now spends his time seething about this and writing about other stuff that bothers him.