To go long, investors are looking for signs of recovery. A clear signal will be a counter-party to the Tea Party currently occupying a critical policy space with Democrats and Republicans hiding behind it to shield them from the extreme economic detriment that ensues.
Government, it seems, has downgraded our credit rating, but it has not. It is the policy program being pursued that is junk.
We turned the century on the path to prosperity...and here we are--busted! Downgraded!
So, what happened?
The long cycle trended negative with a return to Reaganomics, and the tail of that phase is proving persistently long, resulting in a downgrade of our sovereign debt. The nature of this downgrade is essentially this: while conservatives say businesses are not in the business of creating jobs, Eric Cantor, for example, at the same time, says we need to focus on creating jobs after having sustained policies and programs that confirm again and again to resist job creation and debt reduction. If you just keep doing the same stupid thing over and over again, you're likely to get a bad grade!
Signs that will indicate a macro-trend SAR so that investors can safely buy and hold again are: dumping the policymakers that insanely persist in error and, first and foremost, plopping Reaganomics right back on the junkheap of failed policy programs.
The S&P downgrade is not only an indictment of the political process, it is an indictment of an economic program that continuously fails its empirical measure of success with record debt and budget deficits. Considering that big money moved into treasuries to avoid the risk, the conclusion is perfectly clear--contrary to what Ronald Reagan said, government is not the problem.
If government is not the problem, then what is?
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