Let me preface this first by saying I am no economist, but I was blessed in the 10th grade to learn economy from my teacher Dr. Moyer. He was my home room teacher also. Now I attempt to read anywhere from 20 to 30 newspapers around the world to stay somewhat informed on what is going on around me. The reason for so many is due to the fact I trust no single source and have a penchant to form my own conclusion. Although these include top shelf African American outlets including but not limited to Theroot.com, thegriot.com, and even one I write for, Rollinout, they seem to , if at all, write topically about the current debt and deficit debates in a sensational form that lacks a fundamental understanding of economics regardless if Keynesian or Austrian in orientation.
The last I read, the 14th amendment made it unconstitutional for the United States to default on its debt. Not to mention a statutory limit was put in place in 1917 when congress passed the second liberty Bond act. But one would not pick this mention up from reading most papers. Nor would objectivism ablaqueate factual distinctions often left out in an effort to cover the story.
Sure they mention Moody’s and Standard and Poor’s dropping the nation’s credit rating, yet do not provide any historical perspective. The way I see it, a market evaluation on this issue would have seen the rating on US Treasury Certificates (short term bills issued by the Treasury that are issued at regular intervals with various maturities). Should have happened at least six years ago, especially as we see now how bond ratings before the crash three years ago were not very helpful. I mean as a nation we have been basically insolvent for a long time.
Right now as it stands, democrats and republicans are an embarrassment to folk like me, bread and butter and salt and pepper on eggs in the morning Americans. China is already in the process of downgrading the US' sovereign credit rating regardless of what the Congress does. This because no matter what is done, the fundamental problem is the US' inability to generate wealth and borrowing more is not a solution. Plainly stated, we have no loot or at least limited resources left for economic development. And for our largest debt holders, China, raising the debt limit is good for investors, but bad for China,
Now for the typical American, in particular black folks, we don’t seem to have any interest on the issue other than we just want Obama to win and that the republicans are the bad guys. Other than that we don’t know what this all about, or how it affect us or may in the future, or what the Treasury note has to do with this.
It would help if we knew what a Treasury note or Bill or certificate or bond was, but for most of us – it has nothing to do with them, just as what is going on in Greece, Italy, or Spain. Sad thing is that our publications don’t seem to care or even know how to present or write about the issues in a manner that would motivate people to learn or understand they are definitely affected by all this.
Right now, American big banks like Citigroup and Bank of America are down about 7and it is even worse for banks across the pond. BNP Paribas, Barclays, and Banco Santander are all down 13% or more and Société Générale is down 16%. Just last week the downgrade of Portuguese sovereign debt and renewed concerns that Greece will need about $100 billion by year’s end to remain solvent. Which means Italy could take a hit which will expose all the big US banks due to their over extension via toxic mortgage debts, the value of which continues to fall as the housing market continues to sink. Add to this the fact that many of these American finical house have made massive profits by selling insurance derivatives known as credit default swaps to banks in Europe, we should be able to see the problem: for this is the same activity that dropped AIG to its knees in 2008.
Now all I am saying is that these talks and hardheadness on the side of both Obama and the Congress only hit us little folk. Most of them are millionaires and won’t suffer. We can be certain of fuel, water, and food shortages for no particular amount of time as well as Oil Exporters increasing their cost in an effort to deal with the losses resulting in reduced values of US Treasury Bonds. Not to mention that the value of your dollar will fall even lower and won’t be able to buy as much and that the housing market will take an even bigger hit.
All I am trying to say I guess t is ok to be oblivious and think that what goes on in Italy or anything to do with how politicians attempt to deal with this problem doesn’t impact you. But it does, whether we know it or not.