The Federal Reserve has announced
that it has begun planning for the doomsday scenario, where the U.S. defaults
on its debt. "We are in
contingency planning mode," Charles Plosser said in an interview at the
regional central bank's headquarters in Philadelphia. "We are all engaged.
... It's a very active process." In
the meanwhile, two meetings took place at the White House yesterday after
President Obama demanded the appearance of top members of both parties.
COMMENTS:
And Nancy Pelosi, upon ducking out of John Boehner’s office
late yesterday, indicated they were close to a deal and all they had to work
out was how much they were going to raise revenues and stick it to the American
public which, by the way, had absolutely nothing to do with creating this
mess. What I want to know is (1) What about all of that money that other nations owe us and (2) What happened to the $387 billion in TARP money that was never allocated or returned to the treasury?
TODAY’S QUERIES & ANSWERS:
Q. Do you believe the Tea Party is being too hard-nose and
unyielding in its positions on the deficit and debt ceiling? (Wilbur ~ Sacramento, CA)
A. When you’re dealing with snakes, you’d best not blink.
Let us not forget that we just were told, a few months ago, about a $300
billion budget cut for FY 2011 that turned out to be $100 million after the
deal was done. You can’t trust them and
you can’t give them an inch or they will take a mile. There is already some talk around Washington
that the Democrats are taking cuts that were going to occur anyway and counting
them as part of the figure, just like they did the last time. We’ve come too far; we need to hold the
course. I don’t understand how O’Reilly
and friends can criticize the Republicans for being too weak-kneed one day and
then criticize them for being too hard-nosed the next.
Q. I understand that S&P and Moody’s are threatening
that if there are not $4 trillion in budget cuts established within 90 days,
they are going to lower our bond ratings.
Where do they get off threatening the government that way? (Maude ~ Redding, CA)
A. There has to be some reasoned methodology for determining
the value of bonds and other securities.
There are financial recipes and formulas involved and both firms
specialize in making these predictions and judgments. It is to our benefit that they warn us in
advance that things are not looking good so that we have the opportunity to
make adjustments. Besides, I think there
is a realistic possibility that the downgrading could happen much sooner than
90 days. Don’t kill the messenger.
Q. Why doesn’t Obama just come to grips with reality and
resolve these problems? (David ~ Ogden,
UT)
A. Because Obama IS
the problem.
TODAY’S QUOTE:
“We need to work toward the goal of equalizing income in our
country and at the same time limiting the amount the rich can invest.” ~ Nancy
Pelosi
TODAY’S VIDEO: (There’s not room in the universe for two of these)
