How to Ruin a Debt Crisis: Part III

To put it mildly, America is in the middle of an economic crisis… again.  However, there’s a difference between this one and the crisis of 2007-08 or even 2000.  This time, instead of faceless, nameless corporate executives, Americans have somebody real they can blame — and it just might be Barack Obama.  If this credit downgrade by Standard and Poor’s sticks to the President and the crisis turns political, America is in for a ride right out of Roller Coaster Tycoon, and the rest of the world better buckle up ‘cause they’re coming, too.

Before we discuss the mayhem that’s about to ensue we need to get a few facts straight.  First of all, there’s nothing wrong with the American government’s credit.  If anybody would take even a brief panic pause, they’d notice that most people who are getting out of the stock market are putting their Yen, Yuan and Euros into US Treasury Bills.  So much for America’s inability to pay its debts!  Secondly, the US economy is in trouble, but it’s not on the verge of collapse.   Of the twenty largest corporations in the world, ten are American — and that doesn’t include Disney, Coca-Cola or McDonald’s.  Visa and Mastercard are American companies, as are Facebook, Google, Microsoft, Intel and Apple.  Your physical laptop may be made in China, but the guts that run it are American.  Also, there are two essential concepts you need to understand.  One: every single American, from birth, knows that, unless it’s your team, nobody cares who didn’t win The World Series.  It’s in their DNA somewhere.  To reiterate, they believe that there are champions and then there are the other guys; you don’t get points for close.  Two: in general, ordinary Americans don’t know anything about the rest of the world, and they don’t care.  It’s not arrogance; it’s a simple fact.  Why don’t they care?  They don’t have to.  This isn’t bashing “stupid” Americans.  Think about it, objectively.  What difference does the rest of the world make to them?  The reality is not much.  Former Speaker of the House, Tip O’Neill, once said, “All politics is local.”  For Americans this is true.  That’s why Barack better shape up, or in 2012, the locals are going to go Jimmy Carter on his ass and he’ll be spending the next four years planning the Obama Library.

Here’s the scenario.  Last November, the Republicans may have taken control of the House, but it’s the Tea Party caucus that owns it.  They proved that during the debt ceiling fiasco.  As it stands now, in 2012, there’s more than an even chance the Senate could go the same way – a Republican majority with Tea Party control.  Now, as of last Friday, Standard and Poor’s threw the White House into the mix.  Obama’s approval rating is at 40%.  That’s not enough to win re election.  If a Republican – any Republican – gets to redecorate 1600 Pennsylvania Avenue next year the Tea Party is going to be running the show.

Tea Party people are fed up with playing nice with the rest of the world.  They see America as getting kicked around by every two-bit country with a vote at the UN, and they’re tired of paying for that privilege.  This credit downgrade is just another example to them.  They look at the billions spent in Iraq and Afghanistan and say, “Hey, wait a minute!  We could have used that money.”  They want to stop wasting lives and dollars on foreign adventures and get their own house in order.  They want to protect their own borders, their own jobs and their own industry — before they start tackling other people’s problems.  They want to feed and educate their own children first.  In short, they’re old-fashioned Isolationists.  But before the anti-American choir starts gearing up for the Hallelujah Chorus, let’s look at what this means.

Admit it or not, America has been doing the heavy lifting — economically and militarily — around this planet since 1945.  American military spending has allowed Europe to spend their money on social programs and Canadians to buy Health Care.  The foreign aid they gave Asia established global industries that turned Pennsylvania, Ohio and all points northwest into the Rust Belt.  They’ve paid for schools and hospitals across South America and Africa.  And it goes on and on.  There is no part of contemporary society that hasn’t benefited from American dollars.  Pax Americana has given our world the time, space and peace to grow scientifically, medically and culturally.  Anti-American gasbags don’t realize the USA is the most benevolent Superpower in history.  They never mention the trillions of dollars worth of free food Americans have sent around the world, or the free medical aid or industrial assistance.  They don’t talk about things like the Center for Disease Control in Atlanta, or the American Red Cross or the IMF or the World Bank or any of the other goodies Americans have been paying for — for two generations.

So what happens if an America First Congress starts turning off the money tap?  Every country west of the Bosphorus is going to have to up their military spending by at least 20%.  Europe doesn’t have that kind of money, but they’re going to have to find it.  Canadian Arctic sovereignty will become an expensive proposition.  South Korea will have to do some serious sucking up to Kim Jung-il.   Japan had better invest in missile defence, and China’s lost province of Taiwan will probably be reunited with the mainland, at long last.  The Middle East is too disastrous to even contemplate, but Iran’s neighbours should consider stocking up on bomb shelters and HazMat suits.  And the military spending isn’t even the half of it.

If America erects protectionist trade barriers and shuts the world’s biggest economy out of the free trade loop, the Great Depression is going to look like a walk in the park.  World trade will collapse, just like it did in 1929 — but the fall will be further because billions more people depend on it.  Modern Asia’s prosperity is built on exports; and without them they’re burnt toast.  The Yuan, China’s much-manipulated currency, won’t be worth the time it takes to print it – never mind Asia’s lesser economies.

Then there are all the other non-threatening by-products of American isolationism.  Frantic calls from places like Haiti, Somalia and Indonesia will still be there, but they’ll be put on hold.  Relief efforts in non-big-media areas will wither and die.  The UN, not a Tea Party favourite, will be looking around for lunch money, and Unicef, Unesco, WHO and all the other alphabet agencies will be having bake sales to pay the bills.

The last time America shut the doors and went about its business, there was a global economic disaster and a world war.  In the 21st century, American voters are not going to complain if their government stops spending money in places like Eritrea; most of them don’t even know where that is.  No pressure, but Americans don’t like a loser either; so, Barack, you’d better come up with some economic answers pretty quick — or the political fallout is going to be heard around the world.

How to Ruin a Debt Crisis

Yesterday afternoon, money folks around the world exhaled.  American lawmakers, through no fault of their own, came to their senses and voted to extend the American debt ceiling to a number beyond the comprehension of mortal man.  The crisis was averted, and now we can all go about our business again.  Crap!  This is only a temporary truce.  The real war is still going on.

For the last couple of months, there’s been a media laser beam zeroed in on the House, the Senate and Barack Obama, as each one, in turn, demonstrated their inability to grasp simple economics.  As in, if Johnny has 14 trillion apples and he eats every single one of them, his kids are basically screwed on the apple front.  There have been any number of talking head solutions: stop spending my money; tax that guy over there; blame the Chinese; sell the Grand Canyon — and the etceteras just get stranger after that.  It’s hard to imagine that anybody (politicos or pundits) within limousine distance of Capital Hill has the foggiest idea of what’s going on.  Perhaps they should ask the servants – who would probably tell them you can’t borrow yourself out of debt.

Everybody knows that once money gets a nickel past a billion, it’s no longer real.  It’s figures on a page, triangles on a pie chart or bars on a graph – that’s all.  There is no real connection between Sangee’s Daycare money in Lincoln Nebraska and firing off million dollar missiles in war-torn Katphoodistan.  Try as they might, even the brainiest of America’s elected representatives can’t conceive of how much money they’re playing with.  Nor can they understand the simple dollars and cents or it.  The concept that it’s Sangee’s money they’re spending is overwhelmed by the magnitude of the mortgage.  So let’s quit with the rhetoric, folks, and get on with it.

Outside the media glare, there’s a whole different round of battles going on between the House, the White House and the Senate. (What I like to call The Axis of Feeble)  It’s these battles that are dictating the course of events in Washington, not any lawmaker’s inherent concern for Sangee, her money or her well-being.  (FYI, Senators Johanns and Nelson, I’m not picking on you.  I just think Lincoln represents America more than Miami does.)

One of these is the never-ending war between the Executive and Legislative branches of government.  This firefight has flared and died throughout US history, depending on how tough the president is.  These latest skirmishes started when Richard Nixon and Rose Mary Woods destroyed 18.5 minutes’ worth of audiotape — and 184 years of White House prestige — one afternoon in 1973.  Currently, President Obama’s hands-off approach to leadership, has opened the door for crybabies like Boehner to stride around as if they’re on their way to the OK Corral.  Unfortunately, none of them could win an audition on Buffalo Bill’s Mild West Show.  This is where ineffective governance comes from: half a dozen wannabes, whine-slapping each other across the media.  Like it or not, at least Pelosi had the cojones to tell Obama what Obamacare was going to look like.  This crew is scared of their own shadows, and America is whispering because of it.  There’s enough naked power in Washington at this moment to light the entire world — and not three people in town willing to reach for the switch.  Expect more of the same until somebody quits signing pledges to do good and actual does it.  Or until somebody in the White House hotwires the podium to the teleprompter and Obama has to come up with a policy beyond, “We hope to change.”

Furthermore, for the last year or so, the only issue American lawmakers seem interested in fighting for is infighting.  The two-party system is rapidly dissolving into a four, six or eight party fiasco, bent on emulating a 1920s Balkan republic.  The beauty of the two-party system is consensus has to be reached within the party before it ever goes to the electorate.  Whether it was Republicans, Democrats, Whigs or Free Soilers, historically, parties have always fought it out among themselves, long before election time.  They came up with a coherent plan, presented it to the people and let them decide.  This allows for some pretty big umbrellas; different constituents can gather together in general agreement to advance a common purpose.  These days, every Tom, Ron and Michele has their own agenda.  Every issue is a consensus-building minefield.   Every petty opinion demands a voice in a St. Vitus Dance of disagreement.  And every time you turn around, nothing is getting done because every cockeyed notion available needs to be considered.  Propelled by deluded self-importance and an ever-present phalanx of self-serving lobbyists, lawmakers have abandoned ideals in favour of narrow topical ideas which have no connection to the common good (beyond the next election.)  They disdain compromise, in favour of self-proclaimed principles whose shelf life is tied to FOX, CNN and MSNBC.  How can I make these statements?  Easy!  I’ve witnessed the last six months of Washington tomfoolery.

Yesterday, American lawmakers raised the debt ceiling because they had to.  They had no choice.  The very best, well-informed, educated, supported, principled government on the planet ran out of time — like a sophomore with a term paper.  Why?  It’s not like they didn’t know the deadline was coming.  There are several versions of what just happened in Washington, depending on which side of the aisle your sympathies lie.  However, it was John Adams who said, “Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence.”  The facts are those in America charged with maintaining and enhancing the common good have turned their considerable skills, resources and attention away from that task to fight the uncivil wars of petty politics.  They haven’t abandoned Sangee in Nebraska so much as ignored her.  Honestly, if I were
she, come November 2012, I’d shake their buttons off.