25 Apr 2011
America on Credit Watch
For the first time since it began assessing the credit-worthiness of railroad bonds in 1860, Standard & Poor’s has lowered the outlook for long-term United States debt to "negative" from "stable" because of uncertainty over the nation's fiscal health. S&P reaffirmed the government’s AAA rating, but said it’s concerned that "policymakers might not reach an agreement on how to address medium- and long-term budgetary challenges by 2013."
The change in outlook is certainly justified, but it is extremely late and doesn’t go far enough. If S&P is worried about the US government’s ability to manage its budget, it should have issued a downgrade during the Bush administration. It doesn’t make sense to give your highest rating to a nation with a debt load that is nearly 100 percent of its GDP, and has to borrow 40 cents out of every dollar it spends.
The change in outlook had little impact on Wall Street. Stocks initially sold off, but they quickly recovered. I think the reason traders yawned at the report is because S&P and all the other rating agencies have no real credibility. During the credit collapse, they had some bonds that were AAA rated right up to the point that they became worthless.
The raters are too cozy with the government agencies that pay them to rate their debt. Before S&P issued its change, it told the White House what it was about to do. Obama officials tried to convince S&P not to issue a credit warning. After the news came out, Treasury Secretary Timothy Geithner blitzed three major business networks, saying, “I think things are better than they've been if you want to think about the prospects for improving our long-term fiscal position.”
The recent resolution to the 2011 budget debate provides clear proof that Washington is totally incapable of dealing with the national debt. After weeks of squabbling that led to last-minute compromise to avoid a government shutdown, it was announced that the Democrats and Republicans had agreed to cut $38.5 billion from the budget. We were still left with a $1.5 trillion shortfall, but at least it was a start. Unfortunately, the small cut was nothing but a sham. The Congressional Budget Office analyzed the spending deal and concluded that it would only reduce spending this year by less than one-tenth of what both parties had claimed. All they did was move the spending for some projects from the 2011 budget to the one for 2012.
President Obama says that “everyone finally gets it,” and he talks about cutting $4 trillion from the budget. The Republicans countered with a plan to slice $5 trillion from the budget. The reason they both talk about a ten-year period is because it allows them show big cuts that really don’t mean anything. A savings of only $400 to $500 billion each year will still add trillions to the national debt.
One of the counterarguments to why the U.S. should not be downgraded is that the Fed has the power to print money, so we never have to worry about Uncle Sam defaulting on his debt obligations. I agree that the government is unlikely to ever default, but money printing is not a better outcome. Inflation is default by other means.
The government's policy of deficit spending and money printing is destroying the savings of the middle class. Currently, you only get a fraction of a percent in most money market account, and yet inflation is growing at around 3 percent per year. People are starting to see huge price increases at the gas pump and the grocery store.
One of the best indications that high inflation is headed our way is the rapid appreciation of things used to protect against inflation. The price of precious metals and freeze-dried foods, better known as "apocalypse rations," has skyrocketed in the past few months. In February, gold was around $1,300 per ounce. It has now reached the $1,510 level. Silver has nearly tripled in the past year. It has gone from $17 to $47 per ounce. The price of freeze-dried food has shot up 47 percent in the past six months. Some prices have nearly doubled. In October, Costco offered a one-year food supply package for a price of $579.99. It now costs $1,159.98.
The rating that I am most concerned about is the one God is about to give to planet earth. The Bible states that the Lord will someday take an assessment of the moral health of our world and find it worthy of judgment. I am very worried about financial instability coming to America, but spiritual bankruptcy is a more pressing issue. I think we are on the doorstep of the Tribulation hour, and it is vital for everyone to audit their own lives to determine whether they are solvent in the eyes of God. Unless you have your trust in Jesus Christ, you are already bankrupt.
"Come now, and let us reason together, saith the LORD: though your sins be as scarlet, they shall be as white as snow; though they be red like crimson, they shall be as wool"
Quartet Singing Deadly Song
Homer’s protagonist in The Odyssey and the adventures through which the unknown author moved him are brought to mind with the many voices from the diplomatic world singing the same refrain without ceasing–even though egregiously out of tune. These days, I am reminded of how deadly such allurement can be.
Odysseus, the wandering Greek hero, is given instructions for how to safely negotiate his return home. One of the chief obstacles he is told that he will face on his voyage is that of passing by the island of lovely Sirens, the half-human, half-bird female creatures that lure mariners to their death on the island’s rocky shoals with their irresistible song-call, promising to reveal the future.
Odysseus follows his instructions and has his crew aboard the ship plug their ears with bee’s wax. He tells them to tie him to the ship’s mast and instructs them not to loosen the restraints, no matter what.
Odysseus is the only one who can hear the Sirens' song, and he is driven mad with desire to be set free to go to them. But, his faithful crew just ties him all the more securely to the mast, and they move safely past the island to face the obstacles of the rest of their journey.
Israeli Prime Minister Benjamin Netanyahu is on a voyage perhaps not as Homeric, but certainly one through which he must negotiate his way with extreme care, if he is not to run the Jewish ship of state aground on some very deadly shoals. He is hearing the not-so-lovely "Sirens" from many directions calling for his government to give into international pressure–thus to assure a future of peace for all concerned. So far, he has remained securely lashed to the mast, and his government has kept the bee’s wax in their discerning ears of better sensibility.
The lyrics of the song the geopolitical Sirens sing are confusing, to apply the most generous description of their attempts at allurement. But the fact that the chorus spews insanity in their efforts to seduce Netanyahu to throw caution to the wind is the most realistic assessment of their attempt at seduction. The latest of the alluring words come from the leader of the Palestinian Authority (PA).
"The Palestinian president says he is opposed to another armed uprising against Israel, even if faltering peace efforts fail altogether.
Mahmoud Abbas told reporters in Tunisia on Wednesday that he remains committed to a US-backed target of reaching a negotiated peace agreement with Israel by September” ("Palestinian Leader: There Will Be No New Uprising," Israel News, Ynetnews, 4/20/11).
The same leader has in recent weeks declared he will go to the UN, bypassing Israeli input regarding the two-state solution process, to declare Palestinian statehood. His tune has changed for the moment, and one has to wonder what to make of this particular alteration in the siren call to Benjamin Netanyahu and his crew while they try to negotiate some of the most treacherous Mideast waters in history.
This is indeed a strange turn of attitude, since the PA has just received the promise of financial backing from the World Bank and International Monetary Fund (IMF), as reported in this column last week. Now–and after Secretary of State Hillary Clinton has just told the PA and others who seek to declare a Palestinian state without Israel’s participation that the U.S. rejects such a plan— yet another stanza is added to the Siren call that further confuses. The Quartet is singing a deadly refrain in a not-so-veiled threat to the Netanyahu government:
Foreign diplomats warn that if Netanyahu fails to present new peace plan soon, superpowers may officially endorse Palestinian state in 1967 border, with east Jerusalem as its capital.
American and European diplomats warned that if Prime Minister Benjamin Netanyahu fails to present a new peace initiative soon, the Quartet [U.S, UN, European Union, and Russia] may be compelled to recognize a Palestinian State in the 1967 borders, with East Jerusalem as its capital, the Los Angeles Times reported on Tuesday. ("Quartet’ May Recognize Palestinian State," Israel News, Ynetnews, 4/20/11)
It should be considered truly a miracle of biblical proportion if our Odysseus–Mr. Netanyahu, strapped to that mast while the Israeli ship of state plows through the turbulence--doesn’t go stark-raving mad while listening to the cacophony coming from the beckoning Sirens who want to usurp what little land Israel possesses.
It seems to me that the wild-eyed beckoning by supposedly the brightest planet earth has to offer–the diplomatic elite—makes the case that they, themselves, suffer from madness of the sort that drove the mariners of Homer’s tales onto the rocks of destruction. Their wailing is enough to drive anyone crazy.
These are hearing the seductive words of the one being who, since iniquity was found in him, has wanted to usurp anything that belongs to the God of heaven. It is a deadly song they are listening to. It is a deadly song they are singing to God’s chosen people. It is a Siren call that will bring all nations of earth to Armageddon.