This squabble over the debt ceiling is a lot more than some folks think it is especially our Euro friends as was brought out to me quite vividly by my friend, Gordon, who rang up from Blighty.
I've known Gordon for over 30 years: brilliant, funny, fablously successful, married to an American and lived, worked and was educated in America for years. So I was a bit surprised when he suggested (I hoped, jokingly) that maybe our constitution really wasn't useful as a governing document any more, given this stalemate over the debt ceiling.
"A mess, Charlie, I mean you blokes simply can't make decisions with that cumberson thing dreamed up 200-odd years ago. I mean, really, what's the point?"
Gordon doesn't get it and it made me aware that if he doesn't, then my other Euro friends and Euro readers of this blog probably, in one case and almost certainly in the other, do not either. This isn't a simple disagreement or failure of governmental structure that's going on over here; this is something far, far bigger whose ultimate resolution will have profound consequences. To the vast majority of non-Americans this country consists of those areas between Washington D.C. and Maine and California and the State of Washington. That is what yoy visit.; that is where you work and it from those area that your opinion of America is shaped because that is where the communication purveyors are located. It is Liberal, and "cultured," urban, conformists and very rich. What you tend to miss because the vastness of the country prevents it is the 200,000,000 people who live between the two areas I mentioned. Those people tend to be conservative, less cultured and remarkable independent in both thought and way of life. Among that group there are a hell of a lot--more than I thought--who are also very rich and as families have been so for generations. The Leader is from the first group. He, like they, are statist in the European tradition, believers in a form of welfare state and a strong governmental influence in society. The second group wants no part of that vision. What this ultimately will decide is what the United States will look like in the coming century: Sweden--to use an over-used analogy or...well, something considerably less. What our Euro friends should understand, however, is that the lesser role envisioned by The Leader which so endeared him to Europe really would mean the end of Pax Americana. You will be on your own, gang, and the world is still a nasty place. November of 2012 is a very important date. The result will create a force of destiny.
And as for Europe...the Italians cancelled an auction today, the Spanish 10 year blew out to way up in the 6% range and the talk of what a great deal the Greek tragedy was for the banks was rampant. A bit more of this and we may have a few different looking governments in the Euro Zone come October and then who knows what happens. What I forgot to mention the other day was the flip side of the hedge fund story. There may be a few--or a lot--of funds that picked up Greek debt late; at a dicount from par of up to 50%. Now if you own it at 50 and can surrender it at 80, would you take that deal? When that happens and it becomes public--as it will--how ticked off will be the German taxpayers? Keep thinking of the Yogi-man...it aint over 'til it's over.
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