Unlocking Real Value Blog

It’s Hard to Stay Out of the Political Fray……

It’s hard not to shake your head and say WTF? Regardless of your political affiliation, we should all be embarrassed by way that our elected officials are behaving. I don’t usually do politics here, and I’m not going to take sides. I just wanted to get this off my chest:

  • To some extent, the damage has already been done – at least to our country’s reputation. I have no idea if a deal will be done by Tuesday, but even if one is, our international standing has been diminished – hopefully only temporarily, but tarnished nonetheless. Can you hear the Chinese laughing? While they will be hurt in the short-run by the loss in value of their U.S. bonds, they win long-term.
  • Even if there is an agreement, the odds of a ratings downgrade remain very high – the process has shown Washington to once again be dysfunctional and unable to compromise.
  • A downgrade, or even the continued threat of one, hurts our economic prospects and increases the odds of another recession. This fight over the debt ceiling and our government’s inability to devise a plan to significantly reduce the deficit – which must eventually happen – has in the short-run significantly increased the odds that interest rates will rise, economic growth will slow and the deficit will actually get worse as the carrying costs of our debt increase . Almost wants to make you cry, doesn’t it? Talk about unintended consequences.
  • Even under the best scenario of a last-minute deal that is sizable enough to prevent a downgrade, businesses have already lost confidence in the government, and as uncertainty continues to grow, businesses will continue to be reluctant to invest. New jobs will be scarce. In fact, many companies have been increasing layoffs over the past few weeks. Unemployment will remain high for the foreseeable future.

If I seem kind of down on this whole thing, I am. I hope that I’m missing the silver lining – but I don’t think that I am. The situation is bad. But it is the reality that we all have to live in and run our businesses and daily lives in. Sometimes, reality sucks. Now is one of those times.

The leadership of our country has failed us. The vocal ones as well as the silent ones.

We all know that the deficit must be reduced, that our entitlement system must eventually be reformed because there is not enough money to pay the benefits indefinitely, that spending must be brought under control and that the arcane tax code needs to be rewritten. Everyone should pay their fair sure. But class warfare, name calling and rhetoric are not the answer.

This does not have to be a zero sum game.

If any one of us ran our businesses the way that our elected officials are running are government, we would have been fired long ago – probably by the Board of Directors at the insistence of the shareholders. Guess what – we are the shareholders.


One Response to “It’s Hard to Stay Out of the Political Fray……”

  1. Petey Parker says:

    Right ON!!!! So many of the people sitting on either side of the fence have been in DC long enough to have brought us to this point – including John and the President casting past votes … It is up to each and every one of us to stop being the SILENT minority and becoming the VOCAL majority!!!!

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