First the Republicans in Congress took the debt ceiling process hostage. Then they held out for an all-cuts settlement that follows party orthodoxy. During the weeks of negotiations, investors were evidently not impressed with the deal taking shape. The New York Stock Exchange's Dow Jones Industrial Index fell by 1,000 points.
After President Obama signed it on the last day before the deadline, Speaker John Boehner (R-Ohio) declared with satisfaction, "I'm very happy. I got 98% of what I wanted." Obviously unimpressed, the Dow Jones Industrials fell by another 500 points.
Also clearly unimpressed, Standard and Poore's subsequently downgraded the United States' credit rating from AAA to AA+. This is the first time that has ever happened. Today, the first day the Stock Exchange was open after the downgrade, the Dow fell another 600 points.
So, the Republicans devised a settlement their congressional leader considers almost a perfect picture of how they would like to handle the federal budget going forward. And as a result, the value of American equity assets has fallen by about 18% in a month.
Even the business and investment community, frequently supportive of Republicans, recognizes their ideologically-driven approach to the budget for what it is--something that simply doesn't work, couched within a political strategy that reduces governance to gridlock.
Maybe now will come an opening for a realistic, "balanced" approach that fully addresses the problem? One can only hope, and if not, that the public will remember who crashed the bus when the next election rolls around.
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