Courtesy of Pam Martens.
President Obama Walking in Cross Hall at the White House. (Official White House Photo by Pete Souza.)
The People’s House, the U.S. House of Representatives, is now the Obstructionists’ House. Many have forgotten whom and what they represent – the American people and the interests of the United States.
As major financial institutions dump more and more U.S. Treasury bills, once considered the absolute bedrock of safety, the damage the so-called conservatives are doing to confidence in the U.S. is growing exponentially daily.
Yesterday, Fitch Ratings placed the United States sovereign debt on Ratings Watch Negative, meaning it is contemplating a credit downgrade from its current AAA rating on U.S. debt. In 2011, when Congress showed similar dysfunction in raising the debt ceiling, Standard & Poor’s downgraded U.S. debt from its AAA rating to AA+.
A country lacking an unblemished AAA credit pays more in interest when it brings its debt to market. And market participants remember which countries have always had a AAA rating and which have not.
Standard & Poor’s had this to say on August 5, 2011 when it downgraded U.S. debt: “…the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011. Since then, we have changed our view of the difficulties in bridging the gulf between the political parties over fiscal policy, which makes us pessimistic about the capacity of Congress and the Administration to be able to leverage their agreement this week into a broader fiscal consolidation plan that stabilizes the government’s debt dynamics any time soon.”
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