Saturday, December 29, 2012


OK, let's assume you believe the media hype. You probably think that this will happen to our economic ship(s) if we reach the dreaded fiscal cliff ...

Like Christopher Columbus there's no doubt that we will be sailing into uncharted waters. But we will also learn that certain myths and superstitions (about our economy) are best left as myths and superstitions. Here's why.

Like the sailors and engineers who knew a thing or two about the stars and science, we also know what must be done to sail through what many see as uncharted budget territory. Why? Because we went through "the-sky-is-falling" scenario before. It happened when amateur hour prevailed over at Standard & Poor's last year, which I wrote about then.

If you recall, S&P went crazy and downgraded our credit rating. But the world yawned. The financial world, if they see the dynamics behind the fiscal cliff correctly, will do the same thing this time. Specifically, they will see that taking a bad deal, that kicks the issue down the road, is no way to address the budget issues that confront the nation.

What this means (I hope) is that analysts will also begin to embrace the knowledge that there's a difference between the political stupidity and unnecessary brinkmanship (systemic risk) in our political world and what is legitimate financial risk (a debtor that can't pay) in the real world.

Seriously, if we can put ideology aside the U.S. can pay its debts, as I've pointed out many times, in many different ways. I'm not going to hold my breath, but if we're really lucky a Political Reformation and Economic Enlightenment, of sorts, will follow (recall, the Reformation and Enlightenment followed Columbus' voyage).

This means we'll also begin the process of ignoring the false science and political charlatans that make up the lunatic political fringe of our day.

And if we're really really lucky, we might start making the obstructionists pay politically for forcing us into record debt and the crisis political cycles that we've seen since the 1980s, but accelerated after President Obama took office.

I know, I know. But keep in mind that Christopher Columbus and the world got much more than they bargained for after we left feudal Europe for uncharted waters in 1492.

- Mark

No comments:

Post a Comment