Patience is the only cure, really

Uncertainty, and an obviously economically-illiterate president has businesses paralyzed.

Businesses can even survive high taxation - not well, and not broadly, but they CAN function in almost any environment, witness the black market - BUT THEY WON'T ACT WITHOUT A REASONABLY PREDICTABLE OUTCOME.

Uncertainty is the worst possible situation, and because businesses have
a) no idea WTF he's going to propose next, although it'll probably be bad for them
b) if any of the nonsense he spouts/supports is going to survive USSC scrutiny
c) what the democrats are going to do when their utopian idea of universal healthcare - even the tiny step towards it - gets (probably) shot down
d) what the underclass is going to do if/when obama fails to win in 2012, since they've been fed this pap that he's their savior.
e) no matter how bad we're at, Europe's even WORSE (so no refuge there) and as much as Asia appears stable, US mfg'rs are starting to figure out that doing biz in China is like drunkfoocking a fat chick, might feel great at the moment, but the consequences are ugly.  And as much as China != Asia, if China's giant house of cards starts to fall, well, then Asia's going to make the economic crisis in Europe look absolutely trivial.



This isn't rocket science.  This situation is tailor made for businesses to take their cash, bank it or invest in very quiet, very safe ways, and tell the government economists with all their fake 'incentives to grow' to go straight to hell until there is SOME course forward.

Right now businesses are turtling.  You don't get turtles to come out of their shell by hammering on their carapace and say "Hey, it's safe, come out now!"

The emperor has no clothes.

Let's agree on one basic fact: the US spends more than it takes in.

Now, whether your solution to resolve this is "take in more" or "spend less", I think the basic fact is true, yes?  We can agree on that?

Correct me if I'm wrong, but in the entire recent crisis, this basic fact was conflated with another: if the credit rating agencies start to feel that there is a reasonable risk that we can no longer continue to juggle the books and keep paying our debt service, they will downgrade our security rating.

So there was the budget shortfall, and then there was an information question.

The 'deal' between the parties was essentially us 'proving' (we thought) that we could continue to juggle.  There was no ACTUAL immediate cut in any significant amount, nor any increase in revenue.

So S&P nevertheless downgraded the rating of the US.

On the right, they assert that the continuing, flawed economic state of the US is the reason for this.  They point to the root issue.
On the left, they assert that mainly it was about the information issue.  If Teabaggers hadn't caused such a fuss, the credit agencies would have continued to ignore the basically un-sound financials of the US (as they have for decades).

I don't know who's right.  The Left could have been correct - S&P seems so bunkum-stupid, they very well may have continued "what me worry" ratings-as-usual.

But it seems to me that it's pretty damn disingenuous for the Left to point to the Tea Party and say that they CAUSED this issue - that's simply attacking the guy who's pointing out that the emperor has no clothes.  It may have been inelegant and uncomfortable for him to do so, and to make a stink about it, but you can't really say he was wrong.

As far as I can tell, the left's argument is that we should have just kept pretending, then there wouldn't be a hassle, and the party could continue?

Gloom and Doom? Not really.

In response to a question about the US economic security:
"According to this article (http://money.cnn.com/2011/05/16/news...dex.htm?iid=EL), Tim Geithner believes that America will reach a financial bankruptcy unless the congress raises the debt ceiling. My question to you is, are you worried about what's about to happen and what are you overall thoughts?
I'm not trying to be malicious or anything. On the contrary, another financial crisis would affect the rest of the world as well."
My reply:

As long as Starbucks/Caribou/Dunn Bros continue to be successful selling $5 cups of coffee, we're fine.

In reality, while the economic indicators for the country are bad, those for the rest of the world are worse.  Ultimately, the stability of a currency is backed by perception, and the US (for all its utterly stupid policies, co-opted legislators of both parties, truly f*cked spending priorities, etc.) is far, far more stable by any meaningful measure than any comparable state.  This means that when the shat hits the fan, investors will continue to flee to the USD for security.  Now, the almost-certain money-flood that's coming from Congress (inconceivable that they suddenly grow testicles and learn to spend only what they have) guarantees that the USD value will plummet in the short term, but the fear of bond calls is grossly overblown; China might as well put a gun in its mouth before it crash-calls on US bonds which would simultaneously destroy the US economy and vaporize a significant fraction of China's wealth.

Further, as much as we cry about energy dependence, the Saudis understand it far better than the US public (and some policymakers) - the US is energy dependent only as a matter of convenience.  If I had any respect at all for our government, I'd say it was brilliant; the US has ample domestic coal, NG, and yes, even oil reserves for at least a century of current use.  Consuming Middle-Eastern oil first that's hard to ship, hard to protect, and closer to our enemies would be a geopolitical masterstroke.  Energywise, we're fine.  Foodwise, we're abundantly secure, grossly so.  In terms of strategic raw materials, again, we're amply supplied domestically, and only using those of other countries because their lower labor costs and our high environmental standards make them currently less-attractive to extract.  So if tomorrow a wall dropped around each country at its borders preventing any international movement or trade, 10 years later the US would still be almost perfectly unchanged.  I don't believe there are many other first-world states that could say the same thing.  Finally, physically, we're totally secure from even such (seemingly outdated) concepts as invasion.  There's no state (even China) that could credibly threaten the existence of the US for at least the next 50-100 years.

Such surplus and security has in fact probably allowed our government to survive such stupid decisions.

I could go on in detail for a while, but suffice to say that, barring some sort of threat of civil war, or a stunning change in circumstances for the EU*, Japan, Russia, or China, the US will remain the least-f*cked-up state with the best outlook in the developed world for at least 50 years.
* note particularly that the EU's prognosis is far worse than they let on; they are far less transparent than the US government, particularly in terms of the economic circumstances of the PIGS today.  Further, the EU has gotten a free-ride courtesy of the pre-collapse Soviet Union; the raising of the Iron Curtain gave Western Euro companies a nearby hinterland full of people desperate to work hard for low wages to fuel Euro commercial growth.  That honeymoon is almost over, as in the next decade workers in Poland, Hungary, and Slovakia wonder why they can't have the same standard of living, work, and wages of their French/German/British peers.

The histrionic pronouncements from Washington DC are politics, although the political brinkmanship is getting ever-more irresponsible.  I'm not saying that this country isn't past due for some much needed economic suffering (one can only operate on a fiscal premise of 'denial' for so long), but the struts underpinning the country itself are the same sturdy footings that foretold the US Great Power future in the 19th century.