It is the U.S. turn to be banana republic

Financial Post ^ | 07/14/2011 | William Watson

[SeekAndFind]

Half a generation ago a Wall Street Journal editorial declared Canada an “honorary member of the Third World.” The shock of that scolding helped return a country that had begun to think of itself as ungovernable back to fiscal and economic sanity. Might a similarly sharp rebuke from its friendly northern neighbour aid in turning an apparently increasingly ungovernable United States back to sanity? Probably not. But we would feel bad for not trying: This summer’s disgraceful spectacle of a U.S. political system seemingly incapable of addressing the country’s dire fiscal condition makes the United States worthy of honorary banana republic status — with the rider that a banana republic that takes chances with the world economy gives bananas a bad name.

In fact, the U.S. fiscal deficit, at more than 10% of GDP, is already much higher than markets will typically allow the average Third-World deficit to go. The only reason the United States can borrow so much is that for at least a century the world’s lenders have considered the “full faith and credit” of the U.S. government to be as good as gold, sometimes better. But now American politicians are toying with their country’s heretofore sterling reputation — a reputation that in fact eclipsed sterling’s — so as to avoid political responsibility for budget compromises that anyone who does not draw a paycheque from Washington politics can see must be part of any final agreement. This they do in the apparent but obviously misguided belief that if their country’s reputation goes, their own can somehow survive.

The U.S. debt, at more than 60% of GDP, is still short of true Third-World status, but it won’t take many more years of 10-point increments to arrive there. Given the United States’ history and reputation, the markets will be kinder to it when it reaches such levels than they would be to genuine banana republics — or than they would have been to Canada had we not changed course in time. But once it starts to go, reputation can be a quickly wasting asset.

As for politics, the U.S. political system is proving every bit as dysfunctional as politics in many third-world countries, including some where the United States itself is doing nation-building.

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[newheart]

All according to plan, my pretties...

[pallis]

I don’t know if bananas grow very well here, but we’ve already imported all the banana pickers to help us make the transition from a first world, high culture, industrialized nation to a criminalized cesspool of black-market, unprincipled multicultural, state subsidized, hopeless, jobless serfs.

[himno hero]

Banana republic??? IF anything it should be a hamburger republic.

Mr Ohama has taken everything and translated it into a crisis for the purpose of Chaos. He doesn’t know anything about economics....just a minute clearly he does as every step is to chisel away at the hub of western man. With his tinkering and chiseling, he has injected new risk factors into the global economy that has for years operated under stable conditions and accordingly, discounts.

The world needs stability and leadership out of that office and not the chaos he is creating. Obama needs to go, not for just our sake, but, the world is dependent on what happens here.