Posted by Jonathan J. Miller -Wednesday, August 10, 2011, 9:20 AM
Sorry, but being stuck for hours on an airport tarmac yesterday with the pilot telling us every 20 minutes he was trying to get a departure time as soon as the storm passed at our destination did wonders for my outlook in the economy and the housing market. No irony that the airline was AA or Double A (American Airlines).
No Matter What Some Agency May Say, We’ve Always Been And Always Will Be A ‘Triple-A’ Country. Perhaps in spirit, but not financially.
My non-political observation about President Obama’s speech covering the S&P downgrade is best described in Dan Gross’ Yahoo Finance Column “We Need Policy, Not More Posturing — And Now“
Never mind that this is the sort of thing a coach tells Little Leaguers as they’re about to get mercy-ruled. By heaping scorn on Standard & Poor’s, President Obama, and the rest of official Washington, Monday violated Gross’s Second Rule of Punditry: Don’t Pick Down, Pick Up. When you engage in verbal fisticuffs with people below you on the pecking order, it only brings you down and raises them up to your level. Besides, this isn’t an episode of Crossfire.
My political observation is that we seem to have reached the end of the road, err, politically. How do politicians cut costs when they are elected by their constituents who want them to bring home the bacon or deliver tax breaks? I cringe each time I hear phrases like “we need to cut costs” and “we need to eliminate tax loopholes.” After all the brinksmanship and positioning, we end up with some sort of bland compromise and the totality (sp?) of decades of this sort of thing has left us with a massive deficit and reactive fiscal policy with regulatory oversight on things that already happened.
One is that the U.S. political system at some point has to adjust to the reality that we are just one more country trying to make it in a big, bad global economy and probably ought to stop shooting ourselves in the foot on a regular basis. The debt ceiling debate was one example of this; the seeming inability to get a handle on increasing health care costs (or to talk rationally about it in the political arena) has been another. This was the most convincing justification the S&P gave for its downgrade, and while I’m enough of a Pollyanna to believe we’ll eventually get our act together, I don’t see any short-term fix.
The Fed announcement yesterday struck me as further political posturing until after the next election cycle. Good grief.
In light of yesterday’s post, this suggests that:
- Whenever you think the housing market will recover, add 2 more years to that.
- S&P Cuts Ratings on 11,000 Muni Issues so look for local property taxes to jump.
- Unemployment and the economy won’t improve much for the next 2 years.
Think long term and that provides the proper focus for the short term. The same goes for housing.