from "AAA" to "AA+

Well, it happened....
remember my mention in an earlier entry in this Blog of the irrational statements made by several high ranking officials of the European Union? Statements such as "we must not permit an American Rating Agency to damage our currency, the Euro.." ..suggesting that the downgrading of the notorious spendthrifts like Greece, Ireland, Portugal etc. was done by the three American Rating Agencies in an effort to damage the Euro....
It was suggested by these very same intellectual lightweights that these rating agencies "must be smashed"
and so on ad nauseam...
Yes, now it happened: Standard and Poor, one of the three American Rating Agencies, downgraded the Credit Rating of the U.S.A. from AAA to AA+
Now what are the E.U. officials going to say? That S&P is trying to destroy the US$ ? That S&P must be smashed because they downgraded the Credit Rating of their own country? Not likely ....
They will probably come up with some other harebrained coccamamy idea.

Let's examine what S&P said to justify their downgrading: (summarized and abriviated) ..
Efforts to reduce U.S. Government Spending were not enough. The Deficit Reduction must be more significant.
Let me also quote a columnist of the Washington Post, Ezra Klein:
"Standard & Poor is downgrading their estimation of our political system and not our actual ability to pay our debts. Indeed, the past 36 hours offered a stunning demonstration of the market's faith in our ability to pay our debts. Stockmarket panic of the last few days sent investors rushing to buy U.S. Treasuries."

It is, of course, most unfortunate that the two parties, the Democrats and the Republicans, could find a solution to the increase in the borrowing limits only after prolonged, down to the last minute,  haggling and in a downwatered version which really pleases no-one, and which, in the long run, does not solve the ultimate problem. The U.S. government simply must find a meaningful deficit cutting solution to this perennial problem.

I do not believe that an accross the board increase in taxation is the answer: This step usually reduces the ability of the private sector to increase production, thereby increasing jobs, and consequently increasing taxes payable. I also do not believe that the modest advances in social benefits which President Obama was able to achieve should be taken back or modified.
From reading many opinions expressed by pundits and people in the know I do believe:
1.)The United States of America should extricate itself from wars into which it partially was lured by the UN, should let the European Union carry more of this burden and consequently reduce the budgetary provisions for the Pentagon to a reasonable level.
2.) Some of the "tax shelters" for very rich individuals and corporations should be allowed to expire. Although I admit that the removal of a tax shelter is tantamount to the increase in taxes payable, this would limit such an increase to those who benefitted by regulations passed during the Bush aera and which were meant to have an expiry date.
3.) Welfare- and Unemployment payments should be controlled and paid only to those in need.
4.) Rampant duplication of  Government Service positions must be eliminated.

I suppose there are many many other ways in which this problem can be managed. All it takes is Good Will by both political parties and the conviction that the results of a deterioration of the economic position of their country is to the detriment of ALL of its citizens, irrespective of their individual political orientation.


Sell me a Treasury Bill
Bertstravels