The ‘Super Committee’ is reporting that they won’t be able to agree on which Chinese buffet to hit for lunch, much less how to cut $1.2 billion out of the budget over the next decade, and now Congress is scrambling to find a way to not enact the across the board cuts that were the stick meant to get the Committee to actually do something other than posture.
Please excuse me if I don’t rend my clothes and rage at the gods in disbelief on this one.
When the Republicans blinked this summer and kept the government running so that this collection of thieves could get together for a few months to fiddle while Rome burns, I knew we were boned. The truth is this: Our spending, including the military and entitlement programs, is going to be cut. We can either cut it voluntarily and in a way that softens the blow, or we can let the bond market dry up and then fight over the scraps. Either way is going to suck, but the path of inaction chosen by Congress pretty much amounts to people on the side of a volcano going out to watch the fireworks as the lava flows inexorably closer.
So what do I expect to happen?
For one, the stock and bond markets are going to start swinging wildly, but with a general downward curve for the near term. The prices of real things, like gold, are going to restart their steady climb upwards. Look for our national credit rating to take another hit. In order to get suckers, I mean buyers, to purchase government bonds to continue to pay for the bread and circuses, the government is going to have to offer higher and higher interest rates, which will drive up the cost of credit for everyone.
In the long run, I see a general slump in the economy as raising prices drive most of us out of the non-essential markets, meaning nothing other than food, clothing, energy, and housing. Hardest hit will be what’s left of our manufacturing industries. It’s cheaper to repair an old car than it is to buy a new one when you’re worried about whether or not you’ll be able to afford groceries this week. I see unemployment going nowhere fast, and a lot of people will drop off of the unemployment tracking as they just give up.
Doom and gloom? Yep. Accurate? I hope not, but then again, hope isn’t a plan.
It’s past time we accepted that we can’t cash all the checks we’ve written in this country since 1934. We have to cut back, way back. $1.2 billion over a decade wasn’t going to adequate, but at least would have been a good start. Now we get to make popcorn and watch the thriving economy our grandparents created grind itself into the dust.







