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Plenty of blame in U.S. credit crisis

August 20, 2011|By ART CALLAHAM

Two weeks ago I wrote a column about heroes. It was good day to sit and recall some of the many folks who have motivated and inspired me over my several years. As I noted in the column, the names that appeared were but few of the many who have played a role in shaping my life. Writing the column and remembering some names and faces was a cathartic exercise for me personally.

I hope that during this period where there appears to be few heroes — particularly when it comes to our national leadership — your thoughts and reflections about your heroes were equally as uplifting to you as mine were to me.

Last week, my column was a vent and sadly the vent didn't get rid of all of my steam. How about this latest chapter in the saga of the ruination of this great country? Standard and Poor's, followed by Moody's, giving the U.S. a "negative outlook," downgraded the credit worthiness of the United States.

The credit worthiness of the U.S. now falls below those financial powerhouses such as The Isle of Man, Aruba and New Zealand. I have nothing against those countries or the folks who live there; but, "come on, man!" Who's writing these downgrade reports and what is the basis?

Some suggest (and I fall into this category; since I'm writing an opinion without irrefutable facts to back me up) that the S&P and Moody's reports are just sophomoric tit-for-tat paybacks for Congress rapping the knuckles of the rating agencies during the bank lending debacle. Maybe; maybe not. Sadly, there is no broker — no hero — out there to provide those facts.

What does this rating downgrade really mean? Aside from being a failed historian, I also fancy myself a "failed economist;" at least failed enough to have taught economics at the graduate and undergraduate levels for a couple of local colleges; and I don't know.

On one hand, several noted economists state that the downgrade will result in higher mortgage and credit card interest rates while at the very same moment the chairman of the Federal Reserve Board pledges to keep The Fed's interest rates low (and that is nearly, if not actually, zero percent) for at least two more years. To the lay person as well as the ordained, those two statements seem to be diametrically opposed at least in the short term.

On another hand, even the downgraded U.S. credit rating is still a higher rating than the credit rating of China, our biggest lender. That alone tells me that if Chairman Mao and Uncle Sam start trading financial nukes, our uncle still has the leverage and financial might to win that struggle. My hope and prayer is that the only things we trade are financial barbs and not missiles of war.

A little less than 100 years ago the world turned upside down, in part, because of the assassination of an obscure Austrian archduke by a more obscure nationalist wacko. And God only knows we have our own share of wackos.

Finally, let's not forget the "antiheroes" in our Congress. Did you notice the follow-up action by the U.S. House of Representatives after they voted to approve the final Boehner compromise bill? This follow-up action was approved in the House before the Boehner Bill was sent to the Senate for a vote at noon on the following day. (Editorial note, before the president could sign the bill into law, the bill required the "approval" of both houses of Congress.) That follow-up action was the House vote to adjourn for summer recess.

In simple terms, that means the House must have had full assurances that the bill would pass in the Senate the next day. Where was that assurance four weeks ago, or four months ago? Does the Congress mean for me to believe that a compromise was really reached and approved just in the nick of time.

Rather, my opinion is that the whole event was a case of political posturing where party entities attempted to gain political leverage to ensure re-election. This has to be one of the most arrogant actions perpetrated by our elected leadership in the history of our nation.

Enough venting, we do have an out-of-control national debt problem exasperated by teenage-acting analysts in our credit rating bureaus egged on by a national media bent on sensationalism. As I said last week, I'm angry and disappointed with our national leadership, both public and private.


Art Callaham is a community activist and president of the Washington County Free Library Board of Trustees.

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