Monday, August 01, 2011

So the (over) spending can now continue…

It has just been announced that Republicans, Democrats and and President Obama have reached a deal to raise the US government's debt ceiling.

Bugger.

Because as Peter Schiff said last week, “The real crisis will occur not if we fail to raise the debt ceiling, but if we succeed.”  The door is now open to new borrowing, new spending, more stimulus of the kind that has already signally failed … and many more crises to come down the road—and in very short order.

And don’t think that raising the government’s debt ceiling will comfort America’s producers, or avert a downgrade of US Govt Debt.

As former Chairman and CEO of BB&T Corporation John Allison notes

    It is important to recognize that the down grade [will not be] fundamentally based on the debt ceiling issue.  The credit rating agencies are focused on the long term deficits faced by the U. S. government.  Raising the debt limit may (or may not) help in the short term.  However, if federal government spending and deficits are not reduced U. S. government debt will be downgraded and rightly so.  The government will ultimately default on some of its obligations unless spending is brought under control…
    Corporate America is fundamentally concerned about the financial instability of the U. S. government and the very destructive regulatory environment, which is why businesses are holding so much excess cash.  It is impossible for a business to be fully prepared for a downgrade, but CEO’s see the government deficit problem, and out of control spending  as far deeper than the debt limit fight.

That’s what virtually every party to this argument, and every report from the MSM, has wilfully ignored. The fight over the debt limit has been a fight over consequences—when the real battle should have been over causes.

Even now, they fail to recognise that.

4 Comments:

Anonymous Richard McGrath said...

You're right on the button, PC, where you note the MSM (and everyone else) have been focussed on the consequences of a default rather than the causes.

I'm disappointed, but not surprised, that the Republicans wimped out once again.

8/01/2011 03:00:00 pm  
Blogger Jeff Perren said...

Excellent points, but let's modify this:

"That’s what virtually every party to this argument"

slightly.

Virtually every party but the Tea Party - which has fought tooth and nail to stop this insanity. (It was probably a hopeless action from the start so long as Harry Reid rules the Senate. But without it things would have been far worse.)

Still, reality must be faced. Nothing big is going to change until at least January 2013.

Will it then? No one can tell. The long-term trend is still bad, but there is that one slim hope. If some sensible Republicans (they're out there!) take the majority in the Senate and Rick Perry becomes President, there is chance.

Otherwise, America will become 1960s Sweden within a decade, followed by far worse within a generation.

8/02/2011 05:47:00 am  
Anonymous Anonymous said...

It's the unsupportable emotional rhetoric from Obama that disturbed me the most.

Democrats continue their willful, leftist ignorant math replacing it with "more taxes for the wealthiest Americans..."

Taxing this class is an emotional move not a financial solution to the crisis. It will not make the slightest dent in the debt. The figures are available all over the internet. (Stossel did a great show this weekend on these numbers.)

He has attempted, as all lefties do, to divert attention from figures and facts, and replace it with envy tax and schadenfreude. He doesn't want voters to be economically/financially literate - that would expose him.

And yet, there are still legions of voters ready to take the bait of punishing others rather than fixing real problems.

KSKiwi.

8/04/2011 02:31:00 am  
Anonymous Anonymous said...

Schiff's words are sounding rather prescient at the moment.

@Jeff, I suspect Tea Party may be US's only hope now, but it seems like a slim hope. This farce has at least had one effect, and that's that the Republicans true colors had to be nailed to the mast, as they came out fighting to keep overspending and plundering the wealth of the American people right into oblivion. Never has it been more obvious. Though I'm not sure too many have noticed.

- D.

8/07/2011 04:24:00 pm  

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