Well then – it looks like the Debt ceiling will be raised. GOP and Dem “leaders” have agreed to increase US debt by €2.6bn. The world breathes a sigh of relief, or so the MSM portrays it.
Nothing could be further from the truth, however, so let’s start dancing on this debt ceiling.
For starters, US credit rating WILL be downgraded sometime in the next few months. Take that as a given. Why? Because the markets see that which the MSM ignores – namely that the US has adopted EU style profligacy as the default model of Government and this can only lead to sustained economic enfeeblement. There was NEVER any chance of a default, not yet, although four more years of Obama could change that. The US needed to embrace spending cuts RIGHT NOW and instead is has chosen to keep on spending, the cuts can come in the years ahead.
The GOP and Democrats have proven themselves untrustworthy. By agreeing to this folly, they are simply kicking the can down the road. The only responsible people are those in the GOP who said NO to the folly in recent days. They are standing by the principle that you cannot spend your way out of debt. When I see the weakness and indeed duplicity of some in the GOP, I wonder why anyone would want to see them back in power. If the US is going to be socialised, humiliated and bankrupt, best let a Democrat President preside over this rather than some GOP proxy.
The other aspect of this affair has been that it has been entirely a political contrivance by Obama. He has ONE major priority – getting himself re-elected. The GOP seem to want to help him and by going along with this deal, they really do facilitate the Delusionist-in-Chief. He wanted the deal NOW so that he does not have to waste his imperial time going through it all again in the run up to the Election.
The US needed to grasp the need for austerity NOW, not over the next ten years. It has flunked the test. So Obama wins, the GOP wins – and the US looses. Any positive market response to this will fade quickly, the downgrade will happen, unemployment will remain . devastatingly high – but the troughers in DC can continue with their way of regal way life