The end of the drama in Washington is not the end of our problems
16/10/2013 | FxM – Evan Brock Gray
Concern, deception and weariness. These three words describe the feelings of many Americans (and this editor) about their government. After more than two weeks without a functioning government and on the eve of the day that the funds used by the Treasury to pay off national debt are about to run out, it´s normal for people to feel concerned.
Maybe some people haven´t had to use any “government services” during the first official shutdown in 17 years but, on the other hand, you have to think that maybe there are some people with family members, friends or neighbors who work for the government (there are about 800,000 nationwide) that aren´t going to receive at least a half-month´s salary on time (and maybe they´ll never see it). The basic services that these “essential” government workers provide are just that: basic; and it´s no joke to think about what that means for public employees like, for example, police officers in cities with high levels of violence and criminality.
In reference to the possible (but improbable) default on debt payments by the U.S., to put this in a reasonable and manageable context for people not involved in high finance (so as not to get into CDS, swaps, bond yields and interest rate fluctuations) just think how you would feel if some friend, acquaintance or neighbor owed you money and didn´t pay you back… Got a good word in mind? Well, this would be your situation if you were a U.S. debt holder (bonds or T-Bills), either as an individual/institutional investor or as an entire country, and the U.S. was that deadbeat. Would you give money to that person again? “Sure we would,” say the financial markets and other countries, “but I´m going to charge them an arm and a leg interest, especially in the beginning, because those guys always come back begging for more, muahahahaha!” Meanwhile, for the rest of us (who don´t regularly lend money to the largest economy in the world), it would be another head popping out of the body of the Hydra-like financial crisis we have yet to completely kill off.
Americans are also feeling deceived. Over and over again we have a debt crisis that paralyzes us. In the last three years there have been three debt ceiling crises: July 2011, New Year´s Eve 2012 and (right now) October 2013. We should give thanks because they “figured it out” just in time but almost always using the same measures: move around some Federal spending, have the Treasury do a little “creative accounting” and pass a simple debt ceiling increase. The deception comes when it seems clear this situation could be fixed once and for all just by following simple, grade-school level advice: “Don´t leave your homework for the last minute. You´ll run out of time and it won´t turn out as well as if you start right now.” What´s really deceiving to it elect politicians, in good faith and within a democratic system, that aren´t able to leave their ideological differences and political rivalries on the side just enough time to put forth (with our, the voters, help) the foundations of a solid and sustainable long-term budgetary and financial policy. Watching them fall into the same game of playing politics time and time again is what´s wearisome.
I´m sure sooner or later they´ll get this debt crisis worked out. But we´ve all seen this “after-school movie” so many times we´re going to fall asleep. But hey, wake me up at the end of January 2014 because I´m sure they´re going to play it again! And I don´t want to miss it just in case they (finally) change the ending.