Keeping the wolves at bay
(Published in The Malay Mail on 25 October 2013)
Dear President Obama,
Now that the dust has settled, I just wanted to personally drop you a line to offer my heartfelt congratulations.
The federal government reopened late last week, the US didn’t default on its debt, your health care reforms were left intact with minor adjustments only and the world breathed a collective sigh of relief. “Good job!” as they say in America.
Those Tea Party Republicans really did think you’d cave in under all that pressure. But seeing those Republican moderates and Democrats join forces to confront this rapacious minority, albeit at the last nail-biting minute, was really the only sensible ending to this debacle. Their high-stakes effort to defund your health care plan, a law passed by Congress (Affordable Care Act 2010) and subsequently upheld by the US Supreme Court, was, in the words of senior Republican Senator John McCain, “a terrible idea”. It was a fight, funded by the billionaire Koch brothers, that also sought to undermine your authority and put the Republicans’ back on the map. Well, my friend, it has backfired beautifully, as lamented by Republican Senator Lindsey Graham: “This has really been a bad two weeks for the Republican Party.”
And I loved the neat way you stuck it to them at the White House after the compromise budget bill was signed: “You don’t like a president? Go out and win an election.” Forget vote collecting, the last I heard the pack were headed to the hills to lick their whipped derrières.
Your sentiments were on a par with Nancy Pelosi’s vitriolic outburst. Were you in earshot when the House Democratic minority leader, rightly blaming the Republicans for the mess, asked: “was their temper tantrum worth $24bn?” This is what the 16-day shutdown has cost the US economy according to Standard & Poor’s initial estimates. The credit agency also highlighted the US economy’s vulnerability to the “repeated brinksmanship” in Congress, although it didn’t downgrade the current US rating of AA+.
The damage to America’s global creditability has fared even worse. As you said yourself, the last few weeks have: “encouraged our enemies, emboldened our competitors and depressed our friends who look to us for steady leadership.” http://www.theguardian.com/world/video/2013/oct/17/obama-chastises-republicans-us-government-shutdown-video
I don’t suppose you have time to read many analysts’ reports? I recently read one by John Mauldin, as recommended by a friend in Kuala Lumpur who’s wildly interested in the world of finance and follows several commentators in addition to this Texan economist. Mauldin’s report “The Damage to the US Brand” dated 21 October makes for interesting reading http://www.gurufocus.com/news/232344/the-damage-to-the-us-brand–john-mauldin
Granted Mauldin hangs out with the dubious likes of Ron Paul and Tea Party frontman Ted Cruz, but he does get to grips with why America’s image, it’s “brand” has been severely tarnished this past month.
He talks of America’s “exorbitant privilege” of being the “international reserve currency” since the 1950s. Put simply, the world needs dollars to conduct its trade, and while other currencies such as the Euro, or Aussie dollar, can function as reserve currencies, the US dollar is “the 800-pound gorilla”, the currency everyone “trusts”. With this comes both “an exorbitant privilege”—such as US citizens’ ability to purchase goods and services at lower prices than what the rest of the world must pay—as well as a heavy “responsibility”.
That responsibility must be respected Mauldin cautions, for history shows that reserve currencies “come and go” as happened when the US dollar took over from the British pound as the global currency in the post Second World War era. He points to an agreement between London and Hong Kong reached only last week, during the US shenanigans, to begin trading in Chinese Renminbi instead of US dollars…
Maudlin also includes a copy of his open letter of advice addressed to “My Senator, Ted Cruz”. In it, he urges Cruz to become a statesman who is “philosophically grounded and understands the ramifications of the decisions to be made”. For the public will only opt for the party with credible ideas and reasonable with its arguments and programs.
Anyway, I digress. Where were we? You’ve got your government financed through to the 15 January, the debt ceiling raised until 7 February 2014 and negotiators are expected to complete work on a 10-year budget plan by 13 December 2013. That doesn’t give you much breathing space, does it?
And if the howling of the Tea Party alpha male Senator Ted Cruz of Texas is anything to go by, there’s certain to be another fight on your hands soon. I hope you are not planning to be away for the Christmas holidays? For it’s not over yet, not by a long shot.