An old Wall Street adage is:
“Bulls make money and bears make money.
But pigs make nothing.”
So it also goes with politics and many other aspects of life. There is more than one way to accomplish your goal when it just involves you. When there is more than one person involved there is compromise. We live in a democracy where civil government is possible because of compromise. Not everyone is happy with everything every time. BUT most people get something most of the time.
Apparently that lesson has not sunk in to certain members of the United States Congress. They would rather force this nation into default. That’s great! Probably for the first time in their political lives, these non-compromisers are going to keep a promise. A promise made either voluntarily to or extracted by one Grover_Norquist –no tax increase or new tax no matter what.
Personally this Examiner suspects the communication lines between Washington and New York and other centers of finance and commerce are going to be very busy this week-end. And a lot of the conversation may involve telling politicos to keep their promises the way most politicos usually do.
It’s difficult to predict exactly what the consequences of the U.S. Government defaulting will be. The last time this happened was the “Debt Repudiation Depression.” Then economic activity declined by more than one-third from 1839-1843. That was followed by nearly six years of flat to declining economic activity interrupted with a few brief upturns until the discovery of gold in California in 1849. Eventually all the debt was paid back in full.
So the guess here is that if there is default, it will be economically very ugly and very painful to the vast majority of Americans, their employers, their institutions, the over 80,000 units of state and local governments, and around the world.
For instance, just here in Columbus the government of the State of Ohio will stop having much of its revenues coming in, so may not be able to meet its payrolls. The recipients of its payrolls extend all over our state. So businesses all around Ohio will see business decline.
The Ohio State University’s problems with former coach Tressel will seem trivial by comparison. OSU is by almost any measure one of the nation’s five largest universities and by some measures the largest. Its payrolls, scholarships, financial aid programs, research monies, etc. will be greatly reduced. All those are sources of income for thousands of people living in and around Columbus. And that lower income will be felt in stores around this area.
Everyone who depends on Social Security income will not be able to make their payments in a timely way. How understanding will their creditors be? Doctors and hospitals that treat Medicare patients will not be paid and they may have to lay off staff persons, refuse to treat Medicare patients, and generally reduce the level of health care in the U.S.
Of course there are abuses to “the systems” that some insist be severely cut or eliminated. Some of those systems are for personal welfare, some are for corporate welfare. What most Americans want is to see the abuses end. And a lot of Americans do not particularly want either Obama or the Republicans to have the much ballyhooed blank check.
U.S. Government debt is for right now regarded as the world’s most risk free investment. Many interest rates throughout the world are scaled up from what Uncle Sam pays. Much more of this political codswallop and we will all pay more… default or no default.
There is a disgusting irony about these “threats” by the credit rating firms (e.g.; Moody’s, Standard & Poor’s) to downgrade the credit rating of the U.S. Government. Namely they are some of the same firms that a few years ago were presumably giving some of their clients favorable ratings when those clients were in deep trouble, such as having too many sub-prime mortgages. Many of those clients went into some form of bankruptcy, survived on the welfare of bailouts, or were bought out at deep discounts.
So will it be “Damn the torpedoes! Full speed ahead!” even if the economy sinks. Or will it be some practical solution somewhat noxious to many Americans and also somewhat sensible to many.
And de fault will be with “we the people” for electing but not pressuring persons who have demonstrably become unable to deliver any—-let alone better—government. That is something we must do to those who represent us and who govern us.
With all due apology to Shakespeare about this column’s title, let’s remember what Cassius said to Brutus in Act One, Scene Two of Julius Caesar
“Men at some time are masters of their fates:
The fault, dear Brutus, is not in our stars,
But in ourselves, that we are underlings.”