Watch that the crack doesn't extend.
Will the US Congress finally stop playing games and be responsible?
by Tom Thorne
What happened yesterday was inevitable after all the theatre was over concerning the US debt crisis and the deadline for a decision had to be met or drastic economic results would begin to occur worldwide. In fact there really was no crisis at all except the one manufactured to make the new Tea Party members of congress look good in their congressional districts.
Agendas, political agendas are at the base of all this fuss. It is literally a storm in a tea cup. However, the jittery nature of economic recovery and life world wide teetered back and forth while this nonsense was played out for ideological domestic US political reasons. Certainly world stock markets have seen a sell off and downturn as the unease of political gamesmanship played out in Washington.
The entire exercise was designed to embarrass President Barack Obama and make him look weak and wishy washy. That has not happened. Obama now looks like a well meaning victim of a few newly elected members of Congress who have succeeded in making the usual procedures of Washington squirm for a few weeks. A far cry from the revolutionary act of dumping tea in Boston harbour in 1776. It was all ultimately a weak one teabag pot of tea this time. It was mostly a lot of form without any real substance.
Expect those Tea Party people to sink into a more normal life as members of Congress now they have flexed their muscles for their electors at the beginning of their terms. The business of the US has to settle down before economic activity world wide goes into a tail spin. Even the new Tea Party congressional members know that much at least we hope they know that much.
The damage is done.
Of course the damage of this frivolous exercise has been done. Markets world wide have been affected negatively. Gold has spiraled well above $1600 US an ounce. Ordinary people trying to preserve savings and investments have been shaken in their confidence. Employers have been sitting on plans for expansion and as a result hiring is on hold. Europe is close to default at least in Greece, Portugal and maybe even Spain.
The US and State Governments will now have to pull in their horns and the layoffs will start because the deal has lots of cutbacks and of course no tax increases. Sometimes I think that the Tea Party people are sitting back in 1776 when the economy was smaller and simple mostly rural and the United States really didn’t exist.
The fact is these Tea Party people are living in a dream world of their own propaganda. The US is too important to many other economies for these simplistic notions to hold sway in Congress. The truth is the US debt is now 100 percent of GNP each year. That means that the debt of the US government is equivalent to all the economic activity generated by the US in one year. That number is $14 trillion US even in a time of recession and modest growth.
So what is the answer. Perhaps the world would like the US to cutback its commitments world wide to military spending and security? Perhaps it is too expensive to be the world’s policeman? Perhaps they should stop generating innovation and expertise. Perhaps they should go into a recessional period and let the economy of China better serve their own vast internal markets with their wealth and debt gleaned from trading with the West with an artificially fixed currency?
Perhaps it is time for the Chinese and Russian economies to stop supplying arms to African and other third world countries where these sales create constant misery and zero economic activity. Perhaps it is time for others in the world to counter terrorism and extreme political positions and to realize that without US economic activity the world on all fronts would be a lot poorer.
In short it is time for balance in Washington. It is time for leadership and commitment by the world’s most innovative and largest economy to the real values of the Spirit of 1776. That spirit was once democracy and freedom not only of a political kind but of an economic kind that builds human progress, commitment and futures. At that moment the stolid thinking in Washington ensures that these values are stuck in neutral and the world sits in a state of status quo thinking that benefits no one.
© Copyright, 2011, Tom Thorne, All Rights Reserved