Debt Ceiling Debate, or How to Destroy an Economic Recovery

Following on from my discussion of the ‘temporary’ setbacks to the US economy. The debt ceiling debate/impasse.

Many of the respected commentators/pundits I read are saying that the intransigence of the radical Republicans has the potential to severely damage the US economy. Even The Economist magazine has editorialised on this. Its pretty damning.

Me, I’m going to have to disagree.

The intransigence of the radicals does not just have the potential to seriously damage the economy, it IS damaging the economy, RIGHT NOW. There is no ‘potential’ about it. A lot of the intelligent and respected bloggers I read have said that this is all theater, that its all going to be resolved positively, like it has been many times in the recent past. I have to disagree. This time it IS different. Why? The world, and the US particularly, is coming out of a massive recession. Sure, there is growth, but it is anemic. Many, many people are still deeply concerned about their economic welfare and are acutely interested in how all things economic are progressing. Not everyone, sure, but many more than is usual. They are watching this crisis being created in front of them on the TV. They are pulling back on spending, saving just a little more for that rainy day. The velocity of money has, apparently, been on the increase, hopefully showing an increase in confidence. Lets hope this continues, but it would have been much better without this manufactured crisis.

I’m not usually one to pay out on politicians. For a few reasons. Mainly because despite being a a popular pastime, it doesn’t really do much good (unless it gets rid of one who really has to go). But, again, this time its different. The patient is on the gurney, in serious trouble, its time to stop bickering and dickering and take steps to stem the bleeding.

There is an advertising campaign around at present urging people to stop smoking (isn’t there always?). The thrust of this campaign is that each cigarette is doing damage, and by quitting the damage will stop and the repairing will start, immediately. A smoker is not going to get better straight away, but the positive impacts of stopping smoking will accrue, bit-by-bit, day-by-day once the damage has stopped being inflicted with each cigarette. The radicals in the US Congress have seriously damaged the US economy, and continued intransigence continues to inflict damage. But a resolution will slow the damage and begin the rebuilding.

Rant nearly complete.

The chances of the US going into an official recession (a double dip) have seemed quite small. Sure, growth hasn’t been spectacular, but its been growth. It has seemed that the US would at least continue in the positive unless there was some external event that caused a big disruption. I think this debt ceiling impasse has the potential to be this disruption. Who’d have thought it wouldn’t be an external event, but a crisis invented in Washington?

Finally, let me repeat myself from my previous post. I really hope a resolution is reached in the next few hours. Please, radicals in the Congress, if you wont do the right thing by your country and the people in it, please do the right thing so I’m left with egg on my face.

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