And now that two full weeks of fear, hysterics and kabuki were played upon the American people, what did we really learn from all this?
Some thoughts:
1) We learned that in spite of all the theatrics and incessant scare rhetoric about the US' credit rating being affected if the deal did not pass, that it still is in jeopardy even though we did.
~ "Many economists believe that America could soon lose its triple-A credit rating, despite a deal being agreed. Standard & Poor's, the rating agency, recently said that a credible fiscal plan would need to include $4tn of deficit-reduction measures." - Guardian UK
2) We learned that America actually has Four main political parties, not two. They are, from right to left, the Tea Party (a group so staunchly fiscal conservative that even Wall St. can't control them), the Republicans (who represent nothing of the party Reagan led even though they keep evoking his name at every turn), the Wall-St democrats like Obama (emphasis on small-d because when it comes to economics and military, there is Zero difference between them and the Republicans) and the True Democrats (who actually care about poverty, environment, other social ills, etc but can never get any traction because the Wall-St. wing attracts the donors)
3) We learned President Obama is incompetent. Strong words but truthful. Here's economist Paul Krugman's take on the deal:
~ "The deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America's long-term deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana republic status."
4) We learned if the goal of pushing this deal through before Aug 2nd was to calm the markets, it has and will continue to fail. You may see a spike tomorrow and perhaps this week will end on a high note as the Dow is concerned. But never ever forget what the market wants even more than a debt ceiling deal- it wants QE3 (which ironically would push the national debt higher but no one speaks publicly on that) and if it takes creating volatility or artificially deflating the 'bubble' enough to give Bernanke political cover to give the free money, Wall St. will do it- you can Bet on it.
5) We learned and continue to learn that Russian Prime Minister Vladimir Putin is correct when he recently accused the United States Monday of living beyond its means "like a parasite" on the global economy. Russia, like China and many other nations hold a large amount of U.S. bonds and treasuries. And quite frankly they're very nervous about our economic situation because in this 21st century global community, our economy affects all others, either positive or adverse.
6) Don't know if we learned this but we Better- Nothing was solved. No problems were truly addressed or fixed. And this whole two-week circus had ZERO to do with job creation, home value stabilization or any other economic factor that will make any genuine positive dent in people's lives.
Here's an example from AP: "Manufacturers had their weakest growth in two years in July, a sign that the economy could weaken this summer." Of course it should have said 'is weakening' but you know the media.. never give up on 'recovery'
But I digressed.. back to point 6-- politicians used fear of not getting social security checks or military pay to cause further needless panic to make political points. The truth was had we passed the Aug 2 threshhold, those in need and those who serve still would have gotten paid. The President always held the power to temporarily extend the deadline or raise the debt ceiling on his own via the 14th Amendment.
The US was Never Ever in any threat of default-- EVER
Now let's try to put this ugliness behind us and salvage the rest of a nice summer week the best we can.
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