July 13, 2011
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The Courage to Act
New York -- Looks a lot like we're going to repeat 2008/9, except that this time around, instead of banks faltering, it will be entire countries. That's scary! The not so vigilant credit ratings companies of 2008 (e.g., #Moody's, #S&P, #Fitch) are now becoming the ever so vigilant guardians of the credit ratings of entire countries, and the P.I.G.S. (#Portugal, #Italy, #Greece, and #Spain) are in deep trouble, and throw in our friends in #Ireland for good measure. Downgraded sovereign debt to junk status, leaving the ECB unable to stimulate these economies through any meaningful monetary policy. The EU has warned the ratings services for being too quick to "jump the gun" these days, and Italy has taken legislative action against short traders, but alas, the trouble deepens and worldwide investor fear is not so quick to subside. The EU and the ECB really have no power to avert these oncoming disasters, unless EU members see the severity of the trouble that lays ahead, and acts immediately to orderly bring these bankrupt countries' finances under control.
In the U.S., we here are grappling with the inability to come to a budget deal that will allow us to not technically default on our debt. Republicans insist on cutting costs without raising revenues, and Democrats seek to raise revenue at the expense of economic growth. Nobody here is willing to cross the aisle, as an important election year approaches in 2012. So, maybe the U.S. will default on its debt obligations because our leaders (and I use the term very loosely) are unwilling to part with radical ideology. President Obama has actually reached across the aisle and even raised the ire of sects of his own party to do "the biggest deal possible." I think that is brave, and it certainly appeals to independently minded voters like myself, but I fear it is a little more than idle rhetoric. Democrats and Republicans, Tea Party and Libertarians, Communists and Fascists, and Liberals and Independents, need now to all lay aside their radical ideology, and come together for the good of the country (and world) collectively, to insure the U.S. does not technically default on its obligations.
Let me finish by saying that I hope we are not staring down a repeat of 2008/9. But if it comes to pass that entire countries will default on sovereign debt, then the crisis that we witnessed in 2008/9 will be but a miniature preview of the grotesque collapse that is coming. These defaults will bring the entire world economy to its knees, and even the collective economic might of the B.R.I.C. will not be enough to stave off an economic meltdown of proportions that have never been seen in human history. This will truly be the beginning of the end, if it comes to pass. But ironically, we have the power to avert our own economic demise, and it's only if we have the courage to set aside our deepest held convictions, to help the betterment of our fellow men/women. I strongly urge world leaders to take this opportunity to show that we can work together, as people of the same species.
