Tag Archives: United States public debt

Debt Ceiling: Time for Another Shotgun Wedding

Colt Shotgun, open for loading

Image via Wikipedia

Like undoubtedly many other independent investors, I grew queasy as I read headlines and soundbites from remarks this morning by Treasury Secretary Tim Geithner regarding the impending doom threatened by failing negotiations to resolve the federal debt ceiling debacle.  Suddenly, I was transported back to 2008 when each weekend included closed-door negotiations in Washington to avert financial catastrophe.  Nearly 3 years have passed and some of the names and faces have changed, but the story line is much the same.  Armageddon is upon us, and everybody in Washington is looking for a magic wand (see another recent wand-related post: http://wp.me/p1pRY1-gT).  One unfortunate memory forever burned in my memory is the press conference with the CEO’s of Bank of America and Merrill Lynch, who had suddenly “agreed” over the weekend to a shotgun wedding.  Fast forward to 2011, and the parties on the brink are countries, not companies.  Time for another shotgun wedding–polygamy style, since it would make the most sense to package all the toxic waste together in one big, happy marriage.  An economic union consisting of the United States, Greece, Italy, Spain, Ireland, and Portugal might be a perfect smokescreen to buy us another 3 years before the next shotgun wedding.

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Wake-Up Call for America: The Magic Wand is an Illusion

Magic wand

Oh Mighty Government, Wave That Magic Wand! (Image from Wikipedia)

Since the first shock waves of the current economic crisis hit in the fall of 2008, the prevailing attitude on Main Street, Wall Street, and virtually every other street in America has been that the government needs to JUST DO SOMETHING!  The “something” has been an ongoing matter of debate, but the gist of the calls for action have been that government has the ability to make things all better again.  Try as they might with “free” money (stimulus), tampering in markets (for starters, owning GM/AIG/Fannie Mae/Freddie Mac and buying Treasuries–their own bonds–to keep rates artificially low), and buying troubled loans from banks (transferring risks from banks to all Americans), all of these efforts have proven capable of only one thing: delaying the inevitable days of reckoning.  The proverbial chickens do eventually come home to roost, and we will eventually have to swallow the bitter pill of past problems brushed under the rug woven from wasteful and counterproductive government interventions.  Housing is still sinking.  Joblessness is not improving.  Congress is in a stalemate over the federal debt ceiling.  The U.S. borrows 40 cents of every buck it spends.  Suffering has set in across America.  My plea?  JUST DON’T DO SOMETHING!