In a recent interview, Rick Santelli made the assertion that it was because of the Tea Party the USA wasn't downgraded to BBB status by the same geniuses at Standard and Poors who saw Lehman Brothers and Bear Stearns as solvent companies worthy of high ratings. In the middle of another vanity rant in front of CNBC's cameras (this time filled with meaningless sports metaphors) Mr. Santelli tells us "Don’t get caught up in the minutia. All this BS." Well one man's minutia is another man's important detail. When confronted with the Conventional Wisdom world of pundits that is run by vain rants in front of cameras using focus group tested sound bites, the details have never been more important.
But this time, there is a reason that the vain elitist pundit does not want us looking at the details. According to Standard and Poors' Research Update- they lay the blame at the Republican Congress specifically the Gang of Twelve. They site failure of Republicans in Congress to raise revenues as a cause for concern that the Bonds may not be paid. In Standard Orwellian Doublethink he turned the situation on its head with an exact reversal of the facts and claimed the Tea Party was to be thanked for avoiding a BBB rating. And typical of a concise TV pundit presentation, no evidence is ever presented to back that up (although I'm sure mises.org is busy cherry picking those facts right now).
As I mentioned in my Where are we on the Deficit Football Field piece-we are nowhere near default. You can go to the CIA World Factbook and look at what our external debt is is in relation to our GDP. You can compare this with other countries. There are countries with higher ratios of external debt to GDP and they have no run on their bonds. This was an entriely contrived crisis (the goal of which is not fiscal solvency but killing socially beneficial programs) which Standard and Poors reacted to by correctly saying whom was at fault.
And if we were to go in the other direction, we could immediately do something direct about unemployment (Government workers and contractors do spend money and there is a multiplier effect). We could put people back to work repairing our infrastructure. We could eliminate many states deficits and have adequate fire, police and schools. Rick Santelli would throw a fit. But look at his behavior in February 2009 when a meager stimulus was being pushed through Congress to deal with the worst financial crisis in recent history. Mr. Santelli and others like him are going to throw fits no matter what is done (especially when cameras are present). As we recently saw in the "debt crisis" debate, there is no appeasing him or those like him, so it should not even be attempted.
At the time where Mr Santelli did his famous "Well, Mr. Obama..." schtick in front of the CNBC cameras, the think tanks that spread a message similar to his were busy rebranding the policies that had brought us to this point, and part of that playbook was saying "Failed" Stimulus instead of Stimulus especially when there were cameras shooting video. It was February 2009.
There are problems with taking the Dow as an indicator of economic health, but as a general yardstick, I'll use it now merely because it is so widely used. In Feb 2009, the Dow was at 7,600 approximately. The Stimulus failed so much that the Dow turned around and headed up to 12,500 in the space of two years. Unfortunately, it was not enough to deal with unemployment. Unemployment and underemployment are the true bites, the true measure of human misery. of any recession. To Mr. Santelli it is merely a number on a page and a higher ration of impoverished souls he must look at on his limo ride to and from the Chicago Board of Trade. He has a very important job of investing people's money until it is all gone, so I'm sure that added stress on his limo ride is very harsh on him!
But let's put a move like that in historical perspective, The Dow was at 7,600 in November 1997 and passed 12,600 in February 2007. That's some failure! Ten years (with wartime and deregulation caused housing bubble stimulus) worth of stock improvement in just 2 years is impressive. If it had been big enough to put people back to work, the Democrats would never have had to give away my Medicare benefits to Washington elitists in order pay for the Afghan and Iraq occupations.
So now, The Dow has dropped down to where it was last December. That's all the value and economic progress of this entire year evaporated because no one stood up to the "Gang of Twelve" freshman Republicans. And as a quick History lesson, didn't they welcome Obama into office with a cry of "I hope you fail!"? Regardless of the Unemployment, Underemployment and misery of their fellow citizens, they want Obama to face reelection with a poor economy even if they have to be the ones who kill the recovery personally.
As of this writing, I can't say how low it is going to go. No one can! I think I can say with some accuracy, that just as these creatures of publicity were using "Failed"Stimulus just as the stimulus was, in fact, succeeding...they will refrain from using Failed Austerity just as the Austerity they recommend is in the process of failing. It is the nature of the hypocrite.
And one doesn't have to dig far to find hypocrisy behind these loud narcissistic buffoons. Going beyond Mr. Santelli, the leader of Tea Party Nation, Judson Phillips, just revealed to the world something he believes would solve our economic problems-shovel ready projects! That's right, when confronted with the possibility of going from 11 to 9 carrier task forces, Mr. Phillips turns Keynsian! He said, "Thousands of employees would be hired for the steel mills that would provide the steel for the hull and various sub contractors would hire thousands. Do you know what that means?It means they would receive paychecks and go out and spend that money. That would help a recovery. That is a shovel ready project!"
So applying that proven form of economic cure to something that helps people instead of killing them and protecting our oil empire is Socialism and we can't have that, because we'd wind up like the victims of Stalin?
Actually repairing our infrastructure so we can compete with other countries is unthinkable as long as we have this deficit?
I have to compromise my Medicare in my old age with a worthless private voucher so Defense Contractors get to keep raking in millions, while killing civilians in other countries and drinking vodka out of each other's butt?
I have to say enthusiastically and loudly HELL,NO!!
And just to put things in perspective about just how contrived this crisis and these cuts really are-Look at this breakdown of the deficit
Obama and his "out of control" spending at a time when most of nation desperately needs that spending, is $2.4 Trillion. The incompetence and failure of George W. Bush (Iraq and Afghan wars, tax cuts for the rich, Housing bubble) account for $6.1 Trillion. If we absolutely HAD to cut the deficit (we don't) we could easily cut from the Bush part and still have enough money left over to put paychecks in Americans hands again and reclaim our place as the greatest nation on Earth.
Rick Santelli won't like it. Neither will Judson Phillips. But until I see them behave like loud narcissistic buffoons when a Defense bill is being considered or when a proposal to raise taxes on the people and entities who actually have money, there is zero reason to give them ANY credibility!
All revolutions provoke reactionaries. The Left should have realized this and not let them rebrand their failed policies so fast!
If Mr. Santelli wants to use Sports metaphors, here's one that should be considered. The Boston Red Sox went from being the losers everyone joked about to winning two World Series in the past 7 years when they embraced William James' Sabremetrics. It was a revolution in sports statistics that is still being felt. When Grady Little, their manager failed, they brought Bill James into the organization embraced his philosophy and have not looked back!
Mr. Santelli, Judson Phillips, Grover Norquist and others are the Grady Littles who screwed up and now feel entitled to have thier jobs back even as the market is getting massacred immediately after getting precisely what they wanted!
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