The inability of Congress and the Administration to reach an effective and meaningful agreement on how to close the nation’s debt/GDP ratio, (aka The Deficit), not only airs our national dysfunction to the rest of the world, the resulting deal that was reached is likely to have significant negative impacts on world financial markets.
In mid-July, Standard and Poors (S&P), one of the nations’ premier credit rating agencies, made very clear its position on the U.S. credit rating by placing the United States on negative credit watch. In that communication, S&P also made it very clear what would be required to avoid further action.
John Chambers, Managing Director, Sovereign Ratings for S&P stated that “…important that there be broad based buy in across the spectrum of Democrats and Republicans so you have some confidence that the program will be implemented over time…”. Furthermore, S&P provided clear direction on the components of a plan that would avoid a lowering of the credit rating. S&P stated that the plan would need to be on the “high-end” and in their estimates, that meant “around $4 trillion dollars, plus a credible plan to achieve it”
The approved plan of an intitial $1 trillion in spending cuts, plus the “promise” of an additional $1.5 trillions in cuts from a yet-to-be-formed bi-partisan super-committee still falls far short of the clear direction provided by S&P and supported by the other credit rating agencies.
Politicians and pundits have tried to twist this in every way imaginable to support their position from the right or left. The fact is, none of that matters. Credit Rating agencies are more likely to penalize nations for injecting politics into financial decisions. If you don’t believe me, take a look a Greece or Portugal.
Are we prepared for the fall out when S&P moves forward with lowering the credit rating of the United States?
To make sure that you get the message directly from the source, take a look at this interview with John Chambers from Standard and Poors.
Herman Cain has taken a hiatus from his radio program to stick his toe in the presidential waters. At first, I was perplexed by his decision. But after giving it some thought, I think he has his eye on a different prize.
While Mr. Cain may have an exploratory committee to test the presidential waters, it’s hard to see how he stands any chance of winning the nomination, let alone a national election. People have forgotten (and so has he, according to his website), his failed attempt to run for US Senate in 2004. He ran against Johnny Isakson and only received 26% of the vote. If he can’t win in Georgia, how can he win a national election? Read more >>
Many people view the recent election as one of the most important events to impact our political system. In fact, more important than the sum of all of the nationwide election results is the process of redistricting which will begin in earnest early next year.
With the continuing trend of our nation’s make-up towards a minority majority, this will likely be the most important redistricting exercise of the century. It is of vital importance that we encourage our elected officials to fight to ensure that the Black vote is not diluted in the process of creative map drawing and that we continue to uphold the basic premise of one man – one vote. Read more >>