Important Note:
Opinions are fun. My friends tell me I am someone with lots of opinions and that's fine since I don't get mad at others when they disagree with me. In this same spirit I am interested in hearing yours views as long as you are able to share your views without boiling over. I look forward to hearing from you. I tend to write in the form of short essays most of the time, but contributions do not need to be in this same format or size. Some of the content here will date itself pretty quickly, other content may be virtually timeless, this is for the reader to judge.
Displaying 1 - 1 of 1
How Broken Can Things Get?
Posted at: Aug/22/2011 : Posted by: mel
Related Category: Politics & Gov, Watching America,
I know, it’s the summer of 2011 and things look pretty bleak. European debt problems for many countries seem insurmountable. China is continuing to hold back their currency keeping their labor cost artificially low. American unemployment continues to remain high with no relief in sight. Wall Street, the equity side of our economy, is behaving more like one of those county fair rides that are intended to make you give back the overpriced deep-fried hotdog you just ate. Standard & Poor’s, the bond rating agency just downgraded U.S. treasury paper and the world seems to be trembling. All these things are symptoms, but I don’t believe anymore that they are the ailment. I have come to believe that Washington is at the heart of our woes. When Standard & Poor's downgraded the U.S debt rating, the markets went nuts and by most accounts more than $1 trillion dollars in values was lost the next day. I have mixed feeling about the value of these rating agencies. None of the ratings were taken seriously in the mid 1980’s and ultimately hundreds of billions of dollars were lost in the Junk bond market. In the last decade, the rating agencies showed their irrelevance by completely missing the calamity of unsecured mortgages assembled as Collateral Debt Obligations (CDO’s). Why should anyone really worry what the rating agencies have to say now. It was only three short years ago that we were all terrified as our financial system hovered on the brink of disaster after the investment bank Lehman Brothers went broke. Somehow, we got over that and relatively speaking, it almost seems like ancient history now. The European Union seems thoroughly lost. Greece and Spain are broke and many other member nations are only slightly better off. At some point, either the E.U. will fall apart, or there will be a massive write-off. Financially stable countries like Germany are debating how much they are willing to spend on their poor neighbors knowing they will most likely never get it back. I heard one columnist refer to the European Union debt policy as being similar to watching someone playing Whac-a-Mole with members' debt problems. Maybe what we need is a villain to feel better? Angelo Mozilo of Countrywide Financial made an excellent villain in his day. Working with Goldman Sachs, Mozilo empowered greedy lenders and speculators to sell home loans to borrowers who had no chance of repaying their debt. Until this event, I always thought money moved from one hand or pocket to another, I did not know it could actually disappear like a bubble in the wind. Having suspects to line up in a courtroom is modestly comforting, while it does not get your money back; at least you have a bad guy that you can blame. How about blaming China! With relatively cheap labor and a government that refuses to enforce intellectual property protections, patents and licensing violations, or copyright abuse they make a good target. I should hate China, but I actually worry for them. China has 4 times the population of the U.S. crammed into a similar amount of land. China is currently unable to feed its population and has no government sponsored safety nets in place. When their manufacturing bubble finally burst, the scope of their problems will be unrivaled in world history. What makes our current mess unique is that it now seems to be more about politics than economics. I know, our government didn’t create this mess, but I have come to realize that they have had lots of opportunity to at least moderate the pain and show leadership. Do you want to blame the recently elected Tea Party component of the Republican Party; they have definitely been a major player in this debacle? You could just as easily blame the Obama administration who not only let things get out of hand, but have been devoid of real leadership. For most of my life I have been able to watch or read news that followed the actions of highly factionalized governments in little third rates countries. I could turn on the evening news and see the petty arguments and fist waving of the elected leaders who made a spectacle of themselves showing how out of touch they were with their countrymen’s needs. Now I find myself living in one of those countries. This fiasco of stymied government that does nothing except argue and pump their fists enrages me. The most serious problem that this country faces is unemployment. According to the St. Louis Federal Reserve, 58.1% of adults in this country currently have jobs. In 2000, the number was at 64.7%. Ultimately, everything our government does is dependent on tax revenue and tax revenue is dependent on people working. Businesses don’t grow and create jobs during times of uncertainty and perceived fragility. Even if policy is not perfect, the message needs to be sold with confidence by our elected leaders. Stable policies allow for the private sector to find new ways to be creative and make taxable income. I have no love for the rating agencies, Standard & Poor’s along with their competitors Moody's and Fitch are firms whose influence I feel vastly exceeds their competence or value. If ratings are truly valuable tools in investing, I would have to unfortunately agree that the U.S. needed to be downgraded. This downgrading does not reflect that we are really at risk of insolvency, more that we are an organization whose leadership has shown they are incapable of steering the ship through a sea of icebergs. I suppose that I am naïve, but I have distinct expectations from my elected government. Members of the House and Senate get elected to represent their constituents, but that does not mean with single-mindedness. It is important to fight for the things that are important to the people who voted for you, but bringing government and the economy to a near standstill at the expense of the big picture is the wrong result. As some point, Congressmen are supposed to meet in the middle, give a little, get a little and maybe trade for future favors. Our country is too diverse to have a single government policy that is perfect for everyone. At some point you need to settle for the near middle ground and know that part of your agenda was fought for and won. Instead of finding middle ground, too many of our current elected officials are behaving like spoiled 5-year olds who didn’t get ice cream for dinner. They have taken a narrow minded view of either getting what they want, or not letting anyone get anything. There is a term I used to hear from my father, “being presidential.” There are a lot of vague definitions for this term, but I guess ultimately it is about rising above the fray and distinguishing one’s self in such a manner that that person is ultimately looked to as the voice of calm, reason and authority in the most difficult of situations. There is obviously an undefinable quality of leadership imbedded in this mystique. Maybe it is merely the pressures of our media intensive news bit driven era, but I am severely challenged to call anything the white house has done in the past six month “Presidential”. There have been opportunities to be privately or publically the peace maker and consensus builder. Whether our president and his staff do not recognize these opportunities, or do not have the will, presence and political capital to take advantage of these situations is unclear. It could be that “being presidential” is just beyond the grasp of someone’s whose campaign theme was vague as “hope”. We have in the past shown the leadership and will power to survive a civil war, the great depression, World War II, the mistake of Vietnam and the attack on our soil of September 11. In all these situations congress rallied to a common agenda or the President showed the leadership to rise above the melee and steer the ship. All this political shrieking without tangible plans and a calm focus are frustrating. Today's problems are horrible, unemployment and a faltering economy mean that people are suffering, but these should pale compared to some of the previous hurdles we as a country have overcome. Enough screaming, it is time for Washington to rise above their individual agendas and actually solve a problem for a change.
Comments (0) [Add Comment]
