Status quo is Latin for the mess we are in . . .

According to David Gergen, former White House staffer in both Republic and Democrat administrations, what Standard and Poors is saying by downgrading the credit rating of the US government is:

It's not that you don't have the economic capacity to pay your bills, said S&P; we're just not sure you have the political capacity to pay them. One can well object to the decision, as the White House has, but the damage is done in international eyes. Gloom is thick across the waters.

I couldn’t agree more. Our economy has two basic flaws in my opinion. One unstable politics gives it the jitters; and, number two, our stock market is too susceptible to the fluctuations cause by the superstars who play the market for all it is worth. These are not small players, either. These are the big guys responsible for supersized accounts with a lot of clout and a big punch. It is for sure that none standing alone has the power to move the market in one direction or the other to any appreciable degree; but they do act as a catalyst of influence on others. And, in unison the sweep of any trend that they initiate can be very broad indeed.

With a novice in the White House and a bunch of addled nincompoops in Congress and the greed of the superrich running Wall Street I am surprised that we are in as good of shape as we are.

Is this a financial Armageddon? Absolutely not. We have a strong economy fundamentally over the long haul. The problem is—or at least one of the problems is that we want what we want and we want it now. James call this “the lust of the flesh.” And, when you stop and think about it, that is precisely what it is like—kind of a feral lust. A lust gone wild. Reason and patience are not part of the equation. So, in my opinion, the smart investor will just hold steady and the market will correct itself.

One other comment before I close this blog. That is, the 14th Amendment of the Constitution. In my opinion, it is time that someone—preferable the President—pull that out and dust it off. Read if for yourself.

As a matter of fact Our Supreme Court ruled on February 18, 1935 that:

The Fourteenth Amendment, in its fourth section, explicitly declares: 'The validity of the public debt of the United States, authorized by law , ... shall not be questioned.' While this provision was undoubtedly inspired by the desire to put beyond question the obligations of the government issued during the Civil War, its language indicates a broader connotation. We regard it as confirmatory of a fundamental principle which applies as well to the government bonds in question, and to others duly authorized by the Congress, as to those issued before the amendment was adopted. Nor can we perceive any reason for not considering the expression 'the validity of the public debt' as embracing whatever concerns the integrity of the public obligations.

So, all this argument about the debt ceiling and a balanced budget is meaningless as long as Congress continues to legislate us into more financial obligations—included in that of course are entitlement programs like Social Security and Medicare. If that raises the debt ceiling, so be it.
President Obama, as former President Clinton recommended, should have stepped up to the plate and said, “Argue all you want to about extending the debt limit, but we are going to pay our bills.” And, then argued the case in the courts.

I fully realize that it is a complicated mess, but so-what? Our mess is our status quo.