You do not need me to contribute to this flood with excessive bloviation, so let me say simply:
The big deal (S&P credit rating drop) is not the real story. In fact, it’s the small story.
All causes have effects. All big events cause associated details to occur. The credit rating drop is not a cause, it’s an effect.
Republicans and Democrats quickly doled out blame to each other for the first-ever downgrade in the nation’s sterling credit rating, an expected but unsettling move that further clouds prospects for the recovery of the fragile United States’ economy.
The back and forth came after Standard & Poor’s, one of the world’s three major credit rating agencies, cited “difficulties in bridging the gulf between political parties” as a major reason for the downgrade from U.S.’s top shelf AAA status to AA+, the next level down. The rating agency has essentially lost faith in Washington’s ability to work together to address its debt. – Washington Times
The cause is a lack of faith in the USA owing to multiple factors:
- Confused leadership. Not only is Barack Obama a weaker leader than anticipated — typical white racism: elect a guy because he’s black, and only then notice he’s inexperienced and make him the scapegoat for your nation’s ills — but the ongoing liberal-conservative infighting has convinced the world that the USA has no idea how to govern itself. Even further, the ongoing leftist bent of the country since the late 1980s worries experienced investors. Liberalism looks great on paper, but it only arises in wealthy nations and tends to decrease that wealth.
- Lack of cohesion. 1950s America was many things, but it was unified. It liked itself. Now it’s composed of many different groups with different identities and values, and not surprisingly, it works for none of them (jack of all trades, master of none). All of these groups are busy blaming America for their problems, or blaming corporations, where to an outsider it seems that Americans are just spoiled brats who are more concerned with “making a point” and “being different” than solving problems.
- Demographic shift. America has focused on producing home-grown stupid since the 1970s, when we shifted our educational system from “find the right answer” to “explain why your answer helps the disadvantaged.” Our workplace has ballooned into make-work jobs for idiots who follow ISO9002-specified rules, and we have dumbed life down with the internet so any fool can do it. They’re doing it. In addition, we have specialized in importing people from war-torn third world countries without checking their IQs. They are generally dumber than the populations they are replacing, and while it sounds good to say we’re letting them in out of pity, the truth is that our liberals want cheap lawn service too. Our economy is shifting to match, and now resembles that of Brazil or Mexico more than 1980s USA.
- Anti-Economy. We have systematically sabotaged our competitiveness in order to please our voters. Our entitlement state has boomed, not only with direct cash gifts from Uncle Sap, but also with a huge bureaucracy and an even more massive series of dependent jobs it created. How many diversity consultants, addiction counselors, Simplified English translators, customer service associates, hair braiders, interior decorators, technology “visionaries,” etc. do we need? Answer: none. These are all fake jobs that keep people employed, but contribute no actual value to the economy. With the dot-com boom, we stopped focusing on making useful things, and started directing ourselves at making people click little boxes on screens. As a result, much of our economy is entirely tautological: we think that if we have consumers looking at something or buying it, it has value. The re-adjustment happens when our currency catches up and we realize these clicks and looks were worth far, far less than we thought.
- History of poor decisions. If you need to pick a neighbor to watch your home while you’re gone, which guy do you pick — the boring nerd who plods ahead, or the drunken guy who tries a new lifestyle every week? America is the latter. For political reasons, we force banks to accept low-income loans, and then blame them when a huge market springs up around this governmental windfall, and then the economy crashes. We have not found a new direction to replace manufacturing or inventing practical technology; we’ve offshored all the cutting-edge stuff and replaced it with “the service industry,” which is more of us selling stuff to ourselves and hoping the world doesn’t notice we’re a Ponzi scheme.
When Ronald Reagan rebuilt this country after the disastrous post-1968 political climate, he did it by rebuilding America as a whole thing. He gave it a new image, and a new work ethic; then, he began fixing individual things. America became a powerful brand because it had a clear direction, strong leadership, clear political orientation and a forward movement.
We have none of these things now.
So, again, the S&P is not the story. The S&P just noticed what others have seen for a long time. America is adrift in her own internal muddle, and is no longer looking outward but inward. The resulting neurotic, self-conflicted, underconfident, and narcissistic country is no longer a healthy investment.
The market gave us a few years to fix it but since neither leadership nor citizens show any sign of facing reality, the market has downgraded us. Serves us right.