Hold the phone, we run of cash when? In two and a half weeks? Bah, fie and tut-tut. So that’s what’s behind this whole debt-ceiling/deficit talk getting in the way of my “Mad Men” re-runs. But maybe there’s a silver lining. One humble query: If our entire nation can no longer pay its bills and decides to cut little old ladies’ social security checks, will anyone notice — or care — if I don’t pay mine?
Seems if the U.S. Treasury and Congress can’t get it together, then why should I?
During a pivotal summit with Republicans yesterday, Obama rose, looked around and, well, booked it out the door. (Or as The Wall Street Journal more kindly put it, Obama found himself “abruptly walking out of a key meeting.”)
Key meetings, as far as I can tell, are the kind you’re not supposed to walk out of. But the president’s the president, so what can you do?
Alarmed ratings agencies responsible for grading — and downgrading — the nation’s debt (because other people in the world, weirdly, still want to buy it) are sounding the alarm that they may need to review the nation’s gold-star “AAA” rating, the highest money can buy, because our money spigot’s drying up.
You may ask, so what if the U.S. Treasury bond takes a beating due to a terrible rating? That is reasonable. It’s like this, our global markets are not only finely balanced, but also treacherous. Since 1917, the U.S. Treasury bond has been a safe haven for investors in these dangerous waters, a secure place to park your money. So safe that the U.S. bond has traditionally been called “risk-free,” as the richest nation in the world of course would always pay its debts back, right?
Not so fast, say ratings agencies Moody’s and Standard & Poor’s. These agencies feel that any sign the U.S. is slipping in its debt obligations, like not making regular payments to war veterans or vendors or what have you, shows weakness.
As Senator Alan Simpson (R-Wyo.), who co-chaired the White House’s
deficit-reduction panel last year, told the Journal: “They don’t care anything about Democrats or Republicans or the president…They care about money, the bonds, and the securities. They don’t give a rat’s fanny about who is to blame.”
Unfortunately, members of Congress do care who is to blame, hence this long game of chicken between Republicans, who are threatening to let the U.S. default on its debt, and Democrats, who want to raise our already sky-high debt ceiling.
If the standing of the U.S. bond is undermined, it throws the world off its delicate balance. A downgrade will roil stock markets and boost interest rates — which, in this bizarre circumlocution, means U.S. debt will only accelerate.
Not to worry, the deep thinkers in Washington have a plan. Ready for the plan? Here it is: borrow more money to pay off the other money we owe everybody. Problem solved!