Downgrading of the US rating: An awakening call for Americans to rectify many long overdue issues.
Let me reveal that I am not a politician. I am an independent scholar. I support every representative in the USA congress that wants to do public service. I am wary of those who go there with ego and idealistic agenda, even if it hurts the national interests. When I wrote earlier in the wake of mad specter of parties not settling the issue, despite the risk of downgrading, to sack the whole congress, maybe it was a bitter reaction to their agonizingly fruitless wastage of time on whether or not to raise debt ceiling. The real issue is excruciating debt level itself and NOT the raising of debt ceiling, Debt needs to be reduced urgently before it is too late.
I have started this website to focus on our health issues arising out of modern life style. The ugly specter of useless debate was the cause of downgrading of our credit rating first time ever will have an adverse effect on our life style through further weakening our economy and job situation. Hence I am following up with another post since now the subject is more relevant to the purpose of this website.
Credit downgrading; is this real?
First off let us talk about the action of S&P and why did they do this?
Grid locked congress: I am paraphrasing what S$P has said. They waited for the congress to agree to lower the debt level substantially. This they did not. Instead congress kicked can few months down to the so called 12 member congressional super committee. That means problem is not solved. It will hang on our head as the sword of Damocles.
Irresponsible statements and posturing by congress members: Many of them hid behind their mandate of not raising tax. They went on to even saying that it does not matter if we did not pay our obligations on time and default. Are they living in the real world? Yes, one should have principles and ideologies, but when the nation is passing through the worst economic downturn and there are indications that risk of more trouble is on way, every sane person needs to compromise and settle in the best national interest. Every one need to rise above personal and party’s vested interests to minimize further damage. This was not done.
Result was the disgraceful downgrading of US from AAA to AA+ rating. Nation is humiliated. The congress should be mortified. But they seem not to be. Instead of getting together to join hands and find an acceptable solution, they are busy finger pointing, who is to be blamed. They are interested in appointing the person on that 12 member committee, who may serve their “ideals”.
Default by the USA: There is no possibility of default by the USA. As a last resort Feds can print money and pay. The problems that the US facing today is no different than Ireland, Portugal, Greece, Italy and Spain. They all like us have problems of low growth, unemployment, living beyond their means and decision makers bickering with each others, so as not to let their vested interest be hurt. However the big difference between all those and USA is the fact that the size of their economy is only a fraction of the size of the USA. Yet another big difference is that US Dollar is international currency, whereas none of the currencies of the country mentioned above come anywhere near being international. So let us first establish that US is in no danger to default on its obligation but it will certainly have to put its house in order to stop such worries and rumor.
Standard & Poor or S & P: this itself has been partly the cause of the situation. You will all remember that they are the ones who provided AAA rating to many investment banks and credit instruments like swaps and mortgage securities, which in fact caused this recession and economic downturn in 2008. Even in this downgrading they have been challenged by treasury department of a mistake in their worksheet of the tune of two trillions, which was pointed out and still they went ahead with downgrading. It smells of “rotten fish”. So much for S & P.
Nevertheless it is a fact that our economy is not in the best of the state today. We as a nation in a largest debt ever, our unemployment rate is over 9%, new job creation is very small to reduce unemployment. We need to have more revenue, which republicans are dead against. We need to reduce expenses, which can only be done by reducing entitlement of social security and Medicare, which means crushing elderly and sick, which is immoral and democrats are against it. This leaves only defense spending which may be reduced in moderation without impacting our security adversely.
I believe that those who make politics their business for vested interests of their own or their lobbyists to make money in the name of public service makes a mockery of the public service and politics both. So let us not sack the whole congress. But let us make sure that we elect only those who are there for public good and not to shine their political ideals.
WE MUST PERHAPS INTRODUCE TERM LIMITS FOR HOUSE AND SENATE ALSO TO ENSURE THAT OUR REPRESENTATIVES DO NOT MAKE BUSINESS OF THEIR POSITIONS FOR THE LIFETIME EMPLOYMENT IN CUSHY JOBS AND BECOME “KINGS” IN OUR DEMOCRACY.