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America loses despite debt deal
By Fernando Bensuaski |
August 6, 2011, Saturday
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Print Edition
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THERE are two principles that are ingrained in the American character: one states that transparency in government and corporate dealings benefit the public and the other states that we should not air one's dirty laundry in public.
Of course, there is a conflict between these two principles and common sense dictates that we should balance these principles for the common good. In recent years, with the advent of reality television and the intense need many people have to be famous for 15 minutes, a lot of dirty laundry has been aired in front of millions, most recently by the US Congress.
And there is a third principle that is a part of our national fabric: gratitude. Gratitude to those on whose shoulders we stood, gratitude to those whose footsteps we followed and gratitude to those who trusted in our stewardship and lent us money.
In general, I believe in the American political system and that government should be accountable to the people. However, it is pathetically sad to watch politicians disregard our nation's status before the world, the quality of our nation's liabilities, and the wellbeing of those who trusted us enough to purchase our debt instruments, be they domestic or foreign, friends or foes.
Congress did not put on this public circus because there is a greater good to be gained, nor because members of Congress have suddenly subscribed to fiscal restraint, nor because a serious effort will be made to rationally balance the budget. This was done to gain favor in front of one support group or another. This was done to catch the eye of the camera. This was done to see one's own picture in the newspaper.
Not so long ago, being indebted was somewhat shameful. Banks held meetings with borrowers behind closed doors and maintained a level of discretion worthy of a priest.
A family's discussion about its debt problem should be held in whispering tones and that all efforts should be made to show a united front towards our creditors. I am not advocating the silencing of the press or of the people; I am advocating the silencing of the nation's board of directors, the US Congress; megalomaniacs with an insatiable thirst for publicity, the ethics of a goat and the brains of a gnat.
Not being an economist, I am not particularly interested in the technical aspects of our national debt. Is it meaningful that the nation's total government debt is higher than the nation's gross domestic product? How relevant is it that foreign governments and entities hold 47 percent of our Federal debt? Since 41 percent of the US Federal debt is held by US Government agencies and local governments, is it a good argument that the debt is really not that large?
In 1985, total US government debt stood at 57 percent of the nation's GDP and it is now at 110 percent, of which the Federal debt is 92 percent.
Mental numbness
These figures are somewhat meaningless to most of us. However, it is meaningful to notice that few developed countries enter this questionable high-debt area: with Japan being the sole developed country with a larger debt-to-GDP ratio than the US.
Our nation was founded by people who believed that a penny saved is a penny earned, by people who clearly understood the value of one's reputation, by people who believed that holding office was a sacred trust.
Mass hysteria, collective mental numbness and dysfunctional behavior all have led to a tarnished reputation. This collective mental numbness of Congress has led the world to believe a default is no longer unthinkable.
This collective mental numbness has led IMF's head, Christine Legarde, to say that the US is no longer an economic haven and that this public farce (my characterization) created an end to the positive bias towards the US, towards Treasury Bills.
This collective mental numbness has lead Admiral Mike Mullen, the Chief of the Joint Chiefs of Staff to state that, the most significant threat to our national security is our debt.
Socrates, the teacher whose philosophy is one of the pillars of Western civilization, having taken the prescribed hemlock poison, and approaching his last breath, turns to his rich friend Crito and utters these last words, I owe a cock to Asclepius; will you remember to pay it?
When did it become fashionable to be a loser? When did it become fashionable to be a debtor? When did it become fashionable to be so arrogant as to not care about the feelings and wellbeing of those who believed in us?
(Fernando Bensuaski is Managing Director of Goshawk Trading Strategies Ltd, Shanghai. Shanghai Daily condensed the article.)
Of course, there is a conflict between these two principles and common sense dictates that we should balance these principles for the common good. In recent years, with the advent of reality television and the intense need many people have to be famous for 15 minutes, a lot of dirty laundry has been aired in front of millions, most recently by the US Congress.
And there is a third principle that is a part of our national fabric: gratitude. Gratitude to those on whose shoulders we stood, gratitude to those whose footsteps we followed and gratitude to those who trusted in our stewardship and lent us money.
In general, I believe in the American political system and that government should be accountable to the people. However, it is pathetically sad to watch politicians disregard our nation's status before the world, the quality of our nation's liabilities, and the wellbeing of those who trusted us enough to purchase our debt instruments, be they domestic or foreign, friends or foes.
Congress did not put on this public circus because there is a greater good to be gained, nor because members of Congress have suddenly subscribed to fiscal restraint, nor because a serious effort will be made to rationally balance the budget. This was done to gain favor in front of one support group or another. This was done to catch the eye of the camera. This was done to see one's own picture in the newspaper.
Not so long ago, being indebted was somewhat shameful. Banks held meetings with borrowers behind closed doors and maintained a level of discretion worthy of a priest.
A family's discussion about its debt problem should be held in whispering tones and that all efforts should be made to show a united front towards our creditors. I am not advocating the silencing of the press or of the people; I am advocating the silencing of the nation's board of directors, the US Congress; megalomaniacs with an insatiable thirst for publicity, the ethics of a goat and the brains of a gnat.
Not being an economist, I am not particularly interested in the technical aspects of our national debt. Is it meaningful that the nation's total government debt is higher than the nation's gross domestic product? How relevant is it that foreign governments and entities hold 47 percent of our Federal debt? Since 41 percent of the US Federal debt is held by US Government agencies and local governments, is it a good argument that the debt is really not that large?
In 1985, total US government debt stood at 57 percent of the nation's GDP and it is now at 110 percent, of which the Federal debt is 92 percent.
Mental numbness
These figures are somewhat meaningless to most of us. However, it is meaningful to notice that few developed countries enter this questionable high-debt area: with Japan being the sole developed country with a larger debt-to-GDP ratio than the US.
Our nation was founded by people who believed that a penny saved is a penny earned, by people who clearly understood the value of one's reputation, by people who believed that holding office was a sacred trust.
Mass hysteria, collective mental numbness and dysfunctional behavior all have led to a tarnished reputation. This collective mental numbness of Congress has led the world to believe a default is no longer unthinkable.
This collective mental numbness has led IMF's head, Christine Legarde, to say that the US is no longer an economic haven and that this public farce (my characterization) created an end to the positive bias towards the US, towards Treasury Bills.
This collective mental numbness has lead Admiral Mike Mullen, the Chief of the Joint Chiefs of Staff to state that, the most significant threat to our national security is our debt.
Socrates, the teacher whose philosophy is one of the pillars of Western civilization, having taken the prescribed hemlock poison, and approaching his last breath, turns to his rich friend Crito and utters these last words, I owe a cock to Asclepius; will you remember to pay it?
When did it become fashionable to be a loser? When did it become fashionable to be a debtor? When did it become fashionable to be so arrogant as to not care about the feelings and wellbeing of those who believed in us?
(Fernando Bensuaski is Managing Director of Goshawk Trading Strategies Ltd, Shanghai. Shanghai Daily condensed the article.)
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