Rooted in Reason: Nurturing the Seeds of Liberty


Sam Slom on our Economic Crisis by grassroothawaii
August 10, 2011, 5:07 pm
Filed under: Economy | Tags: , , , ,

So Senator Slom is right.  Again.  It’s getting to be a habit with him.  In Hawaii Reporter you can read his take on the debt ceiling crisis and fallout.  (My favorite part–where he mentions that Senator Inouye is Hawaii’s second biggest industry, right after tourism.  And that building your economic hopes on pork from Congress is building on shifting sand.)  Here’s a sample:

 A month ago, I wrote an editorial in Hawaii Reporter in opposition to raising the debt ceiling and conducting government business as usual.

Several professional people, including some friends, argued that I was wrong.  if we didn’t take action, we would face a lowered credit rating, a plunging stock market and higher interest rates, they said.

It was the same argument that was used to force passage of the failed TARP bailout in the last days of the Bush Administration and TARP 2 and stimulus subsidies and grants subsequently.

So, at the last minute, a bi-partisan political agreement on our debt was cobbled together. It pleased neither the right nor the left. In my humble opinion, it was a phony agreement with more promises and no meaningful reform. A “super” Congressional Committee? Really?

The ink wasn’t even dry on the new law when the President, true to his beliefs, authorized billions in new spending and more debt. I said publicly that our credit rating would decrease and there would be huge losses in the markets because we did not address the causeof our fiscal problems: excessive government taxation, spending and debt.

In spite of that “grand” debt agreement, or because of it, Standard & Poor’s downgraded the U.S. credit rating last Friday, from AAA to AA+, the stock market plummeted (again), and interest rates will increase.

Billionaire Warren Buffet responded to S&P’s action, saying  the US credit rating should be UPgraded to “AAAA.”

Over the weekend, the President’s men were quick to blame S&P, the Tea Party, Republicans in Congress and yes, President Bush. Today, President Obama added to the criticism of the messenger, S&P, quoted Buffet, and again called for raising taxes.

The gist of the attacks was that S&P didn’t know what they were doing, their accounting procedures are wrong, and besides, neither Moody’s nor Fitch downgraded the US credit.

I agree that ratings services are just that: ratings services. They don’t know everything.  They do make mistakes. Why didn’t all of them downgrade Fannie Mae and Freddie Mac years ago? Their comments are subject to debate. Kind of like consumer magazine ratings and movie reviews.

But S&P happens to be right at this time. They see no willingness to change government fiscal policies or to improve the investment climate.

(Now go here to read the rest.)

Advertisements

Leave a Comment so far
Leave a comment



Leave a Reply (Comments are approved by a moderator before they are posted.)

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s



%d bloggers like this: