Credibility
The US is getting a lesson in credibility and reputation, and it is humbling. No one is sure what will happen in the markets today but at this hour stock index futures are falling and there is a possibility of another butchery similar to last week. It would be easy to blame the entire mess on dissident Republicans — the Tea Party — as some have done, but that would ignore the multi-trillion debt that the US has and is adding to. The truth is that the US has overspent for decades now and at the same time has allowed itself to hollow out its industry. Ratings agencies and other countries were willing to overlook that for a long time. No more. One might say that the Tea Party has done the country a favor in a perverse way. The US can now start the hard work of regaining its credibility because it can no longer deny that it has a problem. There will be retribution for the downgrade, and it is likely the Republicans will suffer it, but no matter who is in charge after 2012, debt will be an issue that can’t be ignored.
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