Sunday, July 31, 2011

We did what we had to do

The United States is losing its mind tonight talking about two things. One is the raising of the debt ceiling and the other is Shark Week. I'm actually here to talk about the debt ceiling. It's been looming for a while and plan after plan has been shot down. Just tonight, a plan was approved  that will supposedly reduce the deficit and avoid a default.

Naturally, all the uninformed took to the digital airways to complain about the bullshit nature of the government and how they can just raise the debt ceiling whenever they want. First of all, of course we can. It's an arbitrary number. Second, we are so far in debt that it doesn't really matter. Lastly, what the fuck else were we supposed to do about it? Default on our loans? Nothing against Chinese people, but I'm proud to be an American and a default means we're suddenly owned by China. I'm exaggerating, of course, but the point stands. We simply CANNOT default on our loans for a number of reasons, not the least of which is the credibility of our country (which has been better over the course of its history). Could we stop giving aid to countries? Nope. Believe it or not, many countries, especially some in Europe are in worse shape. Has anyone seen the word Greece in the headlines of the last year?

By the way, people raise their debt ceiling all the time. So for those of you who wish you could be just like the shady government, you can. I've known more than one person with credit card that has a $10,000 limit and about $7,000 full. They get a card (while their credit is still intact enough) with a limit of $15,000 and transfer the balance. Ceiling goes up, interest goes down for a while and then more gets charged. Some people make switching balances a full time job.

As for most of America that lives hand to mouth, well I'm sorry for you, but it's your own damn fault (most of the time). Anyone out there in debt that owns a big screen LCD/plasma/LED TV? Anyone use their smartphone to check their credit card debt (hundreds of dollars for the phone with an expensive plan). Has everyone that complains about not making enough money really, TRULY examined all routes to make more? You know there are scholarships for everything imaginable. The fourth generations sons of plumbers born on the southeast corner under a full moon can get 500 bucks a year. More education? More money. Not everyone is destined for that, I get it, but if money is the only thing stopping you, then you're missing out.

Let's look at the people who are bitching about the debt in the first place. Remember the 90's when Bill "what's the definition of is" Clinton was in the White House? He balanced the budget. He didn't reduce our debt to zero, but he balanced the budget. Just as much money coming in as was going out. It happened rather quickly, if you recall. Was it all good? If you say yes then you REALLY didn't pay any attention. We had lots of other things go haywire. People invest in our debt. Distressed assets are appealing to investors. Why? Only one way to go from the bottom. Hell, in 2008 we were laying off toxic debt to anyone that would take it. Of course it was for a small amount on the dollar and we sweetened the pot with other things as well. The point is that when the budget was balanced, things went screwy. The worth of bonds tanked because nobody was investing the bond market. Why? The government didn't need the money, the value fell, people stopped putting money and it fell further.

So a healthy level of debt is just that - healthy. Leveraging the dollar to the hilt is something altogether different. In any event, we can't just ignore the debt ceiling and default on our loans to other countries. At least not in the time of crisis.

Long term, we need a better solution though. Part of the problem is the aid we give to other countries and then borrow against it. So let's say we give country X $1million dollars. Now we need that same $1M so we borrow it from them. We are borrowing our own money from another country and guess what else? We are paying interest to another country on our own money that was aid for them. The solution? People say stop the aid. We don't have many friends and it's not good to isolate the few we've got. Plus that's just not our role in the world. We help everyone at our own expense. It is what it is.

So we need a better long term solution. For now, flipping off the world and letting our loans default was stupid. So we make a last minute decision. We made our bed and now we have to lie in it. No sense letting pride and ignorance make the whole damn thing worse.

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