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S&P Downgrades Obama, Geithner, and Congress
In his inaugural lecture to the country, he told us just how historical his presidency really was.
And now today, two and a half very long years later, the Community Organizer from wherever has deficit spent our country into destitution.
He has spent more than the rest of the previous administrations in the nation’s history combined.
Therefore, last Friday, Standard & Poor’s did what it perceived was only proper…
It downgraded America’s credit rating on Friday from AAA to AA+.
This has never happened before.
A group effort
Of course, the President hasn’t acted alone.
Timothy Geithner and the US Congress are also to blame for this disgrace.
Geithner, you will recall, comes from privilege and is not in the habit of paying what he owes…
Apparently he really is the right man for the job.
He has raised fiscal abuse up to a whole new level, and helped the Administration bring America down to one.
But, really, in the words of the President, Geithner has been “indispensable” in fixing America.
Geithner has fixed the country in the same way that Americans fix their pets, and his assurance last year of “no risk whatsoever” in America losing its AAA credit rating rings as hollow as the President’s campaign slogan of “Hope and Change.”
But let’s not overlook Congress’ role in America’s downgrade.
Their complicity with spending the country into oblivion is total.
Sure, Republicans did not go along with it so willingly, but that’s not the whole problem.
Republicans discredited themselves as the fiscally responsible party when they gave the Bush Administration free reign to spend recklessly in the prior 8 years.
In its statement, Standard & Poor’s viewed Congress’ inability to agree to raise the debt ceiling as a sign of political paralysis, and not a good sign that needed changes will occur.
Who can disagree with that?
There is no bipartisan political will in Congress to change the course of our economy, and the world knows it.
Congress’ 11th hour “budget deal” is like the hangman removing the noose from our necks just to find a stronger rope.
S&P also noted that the $14.3 trillion dollar debt may well rise above 100% of US GDP within a few years if the right fiscal changes are not made.
And there is certainly no awareness in the President’s brain that his huge deficit spending policies are, in fact, the problem…
(Or if there is, it becomes a much different conversation.)
So, what affect will the S&P downgrade on America’s credit worthiness have?
Well, a rise in interest rates should be expected.
It will cost more for America—and American businesses—to borrow money.
How much more?
But it will impair the current US economic “recovery” that is happening…somewhere.
The possibility of a slide into another recession cannot be ignored.
But will the world stop holding US debt?
For the moment, no.
Because context is everything.
US Treasury debt is still very necessary for trade in the world...
80% of all international trade transactions occur in dollars.
And, the US Treasury market is still the most liquid market in the world...
And is crucial for confidence levels in the global currency and trading markets.
Also, nations around the world store value in US Treasuries as a means of maintaining their own currency exchange rates by exchanging “excess” reserves for US Treasury notes.
So the dollar remains the integral part of the global financial system.
But still, there will be consequences.
What will be the immediate impact?
The markets in the US, Asia and Europe are dropping.
This is most likely a short term reaction…that is the hopeful viewpoint.
But China, our largest foreign creditor, is not happy.
It has again said a new global reserve currency to replace the dollar is needed now, and that “the US government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes…are finally gone.”
China also criticized the US for its “debt addiction” and “short sighted political wrangling.”
Russia’s Putin has said that the downgrade can “be ignored” for the moment.
Most likely because, as noted above, there is no real substitute for the dollar.
Strangely, France has expressed confidence the US.
Reuters’ reported that French Finance Minister Francois Baroin said “France had faith in the United States to get out of this "difficult period." Friday's U.S. unemployment numbers were better than expected and so things were heading in the right direction,” he said.
The Indian Government also saw no reason “to push the panic button” just yet, and the Polish Government agreed.
But there was enough concern for the world’s leaders to be in “constant contact” on the phone over the weekend to manage this crisis.
We can only hope that the President was on the golf course.
How long will it take to regain AAA rating?
Will the US ever regain its AAA credit rating?
It’s possible, but may not likely in the near future...
A return to AAA rating would have to be a result of fiscal responsibility in Washington.
Some say it may take up to ten years or more.
But fiscal responsibility left Washington a long time ago, and apparently, has taken up Canadian residency.
Is this the only downgrade in US credit rating we will see?
What do you think?
Is there any sign that our course will change in the next two years?
Is there any sign that Congress will do the right thing and reduce spending?
Is there any sign that the President will lower taxes, regulation, and deficit spending?
There is not.
Therefore, look for more of the same and another downgrade.
When that happens, we will see more dire outcomes.
Calls for resignation
Meanwhile, Senator Jim Demint of South Carolina has asked for Geithner’s resignation or firing.
But why stop there?
Has not this entire Administration put the country at unnecessary risk?
I’ll let you decide...
The “Historical” Presidency
Barack Obama’s Presidency certainly is turning out to be a historical one indeed.
He delivered on his promise.
He has fundamentally changed the country.
In the words of the prior Administration:
And those are…The Gorrie Details.