U.S. Politics - The Game of "Chicken"

July 19, 2011

U.S. Politics: The Game of "Chicken"

It's amazing to me, how daily routines continue and people are either too paralyzed or too naive to think of the consequences associated with  the world's largest economy possibly defaulting on its debt. Maybe I am exaggerating and overestimating the impact of a potential default. Maybe, and so many seem to think, "they" will never let it happen - it is all a political game of "chicken". Matt King, Head of Credit Strategy at Citi, was quoted in the FT WEEKEND saying "Given the likelihood of a downgrade, we are surprised that markets have not reacted more sharply already." Quite frankly, I am shocked. The world must be convinced that the U.S. would never allow the default. I certainly hope so, but convinced…I am not. Too much pride, too many egos involved. Cutbacks of $4,000 billion in ten years. If anybody admitted to being able to accomplish that, why was there such waste to begin with? Reminds me of the 1993 movie Dave with Kevin Kline in which he portrays a U.S. President double and in a brave notion attempts to cut back wasted budget allocations. How daring and exciting to think that someone without any political agenda and ties could come in and make some bold moves!

I don't have that many hot buttons that will lead me to go off in a tangent and become irrational, but politics is certainly one of them. A good reason for me to keep my focus and commentary directed toward the business side, rather than the political arena. To be frank, I try to follow politics as little as possible without being ignorant. The current inability of our U.S. leadership to come to a consensus with respect to the budget, however, warrants attention.

Can anyone possibly foresee the consequences of the U.S. defaulting on its debt? Europe appears to be panicking about the potential global impact. Yet in the U.S., many standup citizens still seem to be unaware of the current deadline and circumstance.

It is also amazing to me that considering the U.S.' involvement in establishing government's in so many different countries over the course of history including Germany after World War II, it is possible for only two parties to exist. Each party loyal to its partisanship rather than to great ideas and the concept of improving conditions for the country's citizens. Individual thinking and creativity appear to be punished; outliers typically have their careers ruined. So, how can you believe in politicians? How can you believe you are electing the best government if you only essentially have an option between two individuals?.... Am I digressing?

This morning as I drove to drop off my 6-year old at summer camp, he is praying for a chipmunk that got hit by a car and was rolling around in pain on the road (by the car in front of us I might add), while I am thinking whether or not I should do some currency hedging before the August 2^nd deadline with his savings. Should I invest in the Euro? Though how stable is the Euro going to be with one country after another going bankrupt?

Seriously, I am clearly not a financial expert neither am I someone who consistently proclaims doom and gloom, but isn't the current state of the world's economy concerning? How do you prepare, what do you invest in? Real-estate seems safe, but then again prices will crash and are they going back up in my lifetime…who knows.

As a so-called business woman, I probably should know how to prepare for a severe global financial crisis. I should probably know, how to deal with my cash, savings, and investments, to minimize any losses. In reality, I don't. In reality, I am worried and am hoping the government will put its egos and wrong loyalties aside and think of its people. In reality, I hope that our leadership will turn into warriors with guts, ideals, and integrity. No political games, please.