The Revenge of the Markets?

Under some of the most trying economic conditions since the 1930’s, most state, county, and local jurisdictions are doing their best to get their financial affairs in order. 

Locally, the Bridgewater-Raritan School District is struggling to keep things going with less.  So are Bridgewater Township and Raritan Borough, as is Somerset County Government.  Similarly, despite much acrimony and dissension, the State of Jersey has passed a balanced budget.

"Should debt ceiling be raised" July 18-20 (Screenshot/ Dick Bergeron)

Compared to what is going on this morning in the Nation’s Capital concerning the political blood battle about raising the national debt ceiling and getting spending under control, the jurisdictions above are models of efficiency! 

In a very ironic twist, state, county and local governments throughout the U.S. have been to some degree forced to implement aspects of “cut, cap and balance,” the very proposal which passed by a wide margin in the U.S. House of Representatives this week, but was rejected by the Senate under threat of veto by President Obama.

The proposal would have required reductions in spending, a cap on future expenditures, and for the states to consider a constitutional amendment to balance the national budget, something that the State of New Jersey is already required to do under its own constitution.  

 But Hey!  Why worry?  The Federal Reserve Bank can always print more money. 

But so far as the swamp on the Potomac is concerned, the chickens are coming home to roost.  Remember when – only a short time ago, it seems -- President Obama was lashing out at all of those fat cats in the banks and on Wall Street, while he was simultaneously bailing out Detroit? 

Right now, there are banking and financial executives, hedge fund managers, rating agencies, and high-speed computer programs all poised to take action very quickly in world financial markets, if the White House and Congress don’t get their act together today and put forth an acceptable proposal on spending, taxes, and the debt ceiling.  

Asian financial markets open later today.  Tomorrow morning it will be Wall Street’s turn.  Markets could rally if the incompetents in D.C. cobble together something acceptable by this afternoon.  But if politicians insist on adding another piece of paper to the house of cards, it may come tumbling down.

This issue is not about fat cats.  It’s about  industry, economic expansion, jobs, the safety of social programs, and the stability of the U.S. financial system.