The Debt Ceiling Mess

This it going to be a purely my point of view entry under the personal category. This way I have something written to look back on in the future. I’m getting the feeling events are history in the making with a capital H. So time to organize my thoughts for posterity.

The debt ceiling expansion is a political no win scenario for the Republican Party and possibly extremely damaging to President Obama. No matter what is passed it will not address the massive debt the government has accrued.

The Left can jack up taxes all they want and it won’t work. There is a phrase called “capital flight” and we’ll see the wealthy move what is left of their money overseas if this happens. That will not generate revenue or jobs here. No employers equal no jobs and the socialist model of all working for the government is unsustainable. The Twentieth Century proved that repeatedly.

Only harsh spending cuts will do any good at stimulating the economy, but that is impossible given two thirds of the government is under Democratic Party control. The House GOP freshmen have badly miscalculated what their real power is. So even if the Boehner plan is passed it will die in the Senate or be vetoed.

I’ve felt for some time we passed the point of no return vis a vis the national debt and that it is impossible to pay it off. Eventually it won’t be possible to borrow any more money, since Europe and Asia are in trouble too. The only thing allowing this charade of solvency to continue is that there is nowhere else for investors to move to than the dollar and US bonds.

Meanwhile, there is zero leadership being exhibited by Obama. His main concern is with kicking the ceiling issue down the road past November of 2012. Even raising taxes is secondary to getting reelected. Harry Reid is not much better. The Senate Democrats haven’t passed a budget in over 800 days. That’s years!

Many of my fellow Tea Party types want a default. Like the House GOP Caucus, they’ve badly overestimated their power in a split government. I don’t always agree with Charles Krauthammer, but his advice to focus on 2012 and taking the Senate is sage. But most in the Tea Party movement are political neophytes and believe taking a principled stand will win the day. Sorry, our government is far too corrupt for that to work.

The fiscal irresponsibility of decades by the Democrats and Republicans has gotten us here. So has the same irresponsibility of the citizens who have run up the same kind of debt. Right now many citizens are paying the price for their screwing up and it won’t be long until everyone will pay for the federal level screw ups.

I’ve often thought Wall Street and stock markets in general live in a fantasy world with little attachment to reality. The fact traders are just now tumbling to the idea there will be a default is a fascinating case of denial. It is much like both sides of the political aisle thinking the other is bluffing.

Default is coming in the future due to the way politics works. It is a matter of when, not if. It is also a matter of who will take the political blame. It doesn’t matter who is in the right or who was really responsible when the blame game begins for real. With a detached political class out of touch with the common man, frictions are going to grow until combustion happens. Why do I keep thinking about the aftermath of the French Revolution?  It isn’t a comforting reflection.

We are in a genuinely hopeless situation barring something utterly improbable and unpredictable happening. Instead of doing necessary things, we have political theater which is pretty much the norm when collapses happen. Neither the political class or the masses are willing to do what needs to be done.

I think it was Mark Twain who said, “History doesn’t repeat itself, but it rhymes.” In this case, I think the Great Depression may not be the proper model. It may be more like the fall of an empire with a massive earthquake followed by many severe aftershocks rippling across the globe.

We haven’t hit the really bad parts yet. But it is so very galling seeing what is coming and knowing nobody will stop it. Procrastination goes hand in hand with corruption and this may be the most telegraphed disaster in recorded history. Why do we have to be so Epimethean rather than Promethean? Bet that’s been thought many times since the age of the ancient Greeks.

The sole comforting thought is that humanity has gone through all this many times and survived. The wheel of history keeps turning and people find a way to make it through the darkness. Eventually, light returns.