Thursday, July 28, 2011

The Debtor's Dance

With her staunch, power pantsuits and wonkish ways, few would have taken Hillary Clinton for a tap dancer.

Yet U.S. Secretary of State Clinton was doing approximately that in Asia earlier this week as the idiocy on Capitol Hill continued, careening us closer toward a completely unnecessary crash of confidence in America.

U.S. Secretary of State Hillary Clinton speaks in Hong Kong. Photo courtesy: CNN
Perhaps there's a conservative out there smiling, but it's hard to imagine any true patriots actually are.

Before a Hong Kong audience of investors and policymaker on Monday, Clinton deftly dodged any sense of panic about the tomfoolery that is the faux crisis of the debt ceiling debate. She danced about the obvious -- that so many legislators are intent on driving the economy off the cliff, both domestic and global, insistently so, because they are too busy denying that a default would mean anything.

These kind of lawmakers will castigate "greedy" homeowners for causing the housing bust, often pointing their fingers as lower-income folks who dared to grasp the American Dream via the detested Fannie Mae or Freddie Mac. When these homeowners default (and those middle-income people who snapped up jumbo loans to live large usually are excused from this), it's a sign of incompetence and irresponsibility.

Yet when the U.S. Congress OPTS to default on its standing obligations, be it paying its mortgages or checks to veterans , the logic is that it's a sign of principle. It's about stopping "spending" and ending debt.

Let's face it. Most people would love to end their debt by just not paying their notes on time, but banks don't take too kindly to that. The same is true in this case, where the ongoing threat of such stupidity is giving great pause to our bankers -- largely China. They are frowning deeply at U.S. political "recklessness" and acting -- downsizing their T-bill holdings and other investments, further weakening the dollar and our recovery.

Overseas, it's hard to fathom that this great nation, once admired for its generous nature and prudent stewardship, has allowed itself to be enslaved by a handful of tea-swilling, mission-blinded zealots.

Yes, the United States is on a negative slope when it comes to its fiscal house. But even the sober authors of the U.S. debt commission report stated that "budget cuts should start gradually so they don’t
interfere with the ongoing economic recovery." This isn't the time to insist on a bloody hacksaw job. But that kind of intolerant rigidity has been the demand of the Republican caucus, thwarting the deals to date.

It's this lack of coherence and compromise that has made ratings agencies, Wall Street and world investors uneasy. We just got out of a tumultuous economic period and have been settling into a jittery one. Now the U.S. House of Representatives, led by mistaken Republicans, are rumbling us back toward catastrophe.

Hillary Clinton is probably happy to be back stateside. Were she still traveling, as the Aug. 2 deadline to lift the debt ceiling looms and the deadlock ensues, she just may have worn out the taps on her shoes.

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