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Eric Cantor in a Reuters photo
Phew, man but that was close! I mean gosh, I just thought it wasn’t going to get there in time. Wow those guys sure worked for it. They looked the devil in the eye and banished him. They got the deal. The debt crisis is over hooray!
Yeah, and I’m a teapot.
What a bloody mess. No one doubted that the debt ceiling would lift, after all it’s been lifted dozens of times since the Second World War. That bit of the crisis was manufactured by the Tea Party. The real problem was, is, and will continue to be the debt itself and its constant inexorable exponential rise. And this “deal” has done nothing whatsoever to sort that mess.
Let me explain.
But first, a graph and just so you don’t think I imagined the numbers, or squeezed the curve of the rise etc this comes direct from Whitehouse gov. So it has to be kosher – yes?
It’s the sheer size and steep rise of the debt that is spooking people and not the ceiling. It was never about the ceiling which is why the markets and the commentators are taking this all so badly. Unfortunately for Obama, no matter how hard he tries, this is just not selling. I note that many US based main stream papers and media commentators are reasonably sanguine about this dreadful, awful, hopeless deal. However no one else seems to want to buy the line “Issues will be tackled by the committee”. As if.
Foreigners, so taken to task by Obama during the election lectured on why spending and investment were the cure to recession, are not amused. This is going to hurt everyone, not just Americans. America will be down-graded and inflation will rise. In every American debt crisis from the Civil War to the Second World War America bailed on her debt by inflating it away. Why would we think this will be any different?
The British Daily Telegraph yesterday talked gloomily of “end of empire fear” gripping hard, New York’s mayor Bloomberg spoke of a “bad ending if debt itself is not tackled”.
China’s People’s Daily, always good for a blunt quote, said today, “Although the United States has basically avoided default, its sovereign debt problems remain unresolved. They have been merely pushed off, and there is a tendency for them to grow. This has caused a cloud over the United States economic recovery and also increased the risks and perils facing the world economy”
Jonathan Chait asks if Obama got rolled. You bet he did.
So who won and who lost?
Obama sure as heck lost this one. He tried to be the grown up in the negotiations, all Mr Headmasterly and blew it. His policies have been shot down and he cannot escape the blame. He has been outmanoeuvred by Tea Party activists and political amateurs. His credibility at home and certainly abroad is poisoned. He looks like an executive who has simply lost grip of the economy. His only saving throw is that it was not an actual default. Which as Chait suggests, is hardly the “Hope” and “Chance” people voted for.
The Democrats lost. They have not made any progress on Tax Issues and there are cuts a-coming to some treasured programs. Not a good day. Doubt me? Well just look at all the happy faces standing in the second and further back rows in all the photos like the one above. They cannot even manage a forced grimace for the cameras. They look exhausted and broken. Any ideas of working together on the nation’s problems were lost in this fracas. Word is that in Washington things are so bad Republicans will not go to dinner parties if Democrats are there and vice versa. Politicians refusing a free feed! Dear God can it be that bad?.
The Republican won, in that they avoided tax rises for the rich.
The Tea Party show once again that they represent a sizable slice of America that has just plain had enough with clever-clever bankers, economists and politicians. They have proved they are a real force in the next election. Bachmann is raised on this and Palin is also enhanced. If the republicans want to contain this beast in their midst they need someone better than punting poor old Mitt Romney who is rapidly becoming just another loser. Do you hear the calls for Jeb Bush yet? No? Well give it til Christmas which is my bet for when this sorry mess unravels again.
But, as always the real losers are the poor, the uneducated, the sick, the unemployed, the under-employed, and always the poor bloody middle
classes who are still left carrying the burdens of wars they never asked for and cannot win, whilst trying to hold onto a job, run a business, pay a
mortgage and keep society together.
Not a good day. For anyone.
Copyright David Macadam 2011