Major market indices were mixed last week. The DJIA lost 0.31%, the S&P 500 dropped 0.64%, and the Nasdaq declined 0.57%. Growth stocks outperformed value stocks. And the small cap index lost 0.70%. The 10-Treasury yield closed 17 basis point lower at 3.41%.
Congratulations are in order.
A week ago Friday, Washington insiders were able to come together at the last second and avert a full-blown government shutdown by approving a budget. What leadership.
The mail will be delivered. The families of U.S. troops will be paid. Trash will be picked up. Parks will remain open. Animals in government labs will be fed. And Democrats and Republicans will work together in order to solve the pressing social and economic issues of the day.
Well, the mail will be delivered.
Members of Congress danced and preened for their constituents throughout the budget showdown as if they were determining policy that would impact the very future of the planet.
Boehner and Ryan stared into the cameras, boldly refusing to rubberstamp budgets that continued down the path of fiscal insanity.
Harry Reid blamed extremist Tea Partiers. Pelosi said that the GOP budget was "a war against women."
Last October, Democrats enjoyed a majority in both houses. They could have set and passed a budget.
But that was too dangerous. November's election loomed. Nobody wanted to make any public pronouncements, let alone actual an decision, on anything that could be construed as negative for a single American voter.
Pain? Unacceptable. The electorate has chosen the road most anesthetized.
You can't always get what you want. The Rolling Stones knew it. And told us as much decades ago. But our politicians would rather bring the nation to the brink of fiscal collapse than lip synch those cruel lyrics.
Only, this morning Standard & Poor's came out and sang it for them.
S&P lowered its outlook for the long-term debt of the United States of America. The ratings agency reaffirmed the top-tier rating for the U.S. economy. But, it simultaneously lessened its rating to "negative" from "stable" because of the uncertain debate around the nation's fiscal problems.
And this as the denizens of D.C. seek to increase the nation's debt limit.
The new outlook means there is a one-in-three likelihood that S&P could lower the long-term rating on the U.S. within two years, the agency said.
"More than two years after the beginning of the recent crisis, U.S. policymakers have still not agreed on how to reverse recent fiscal deterioration or address longer-term fiscal pressures," explains S&P credit analyst Nikola Swann.
Translation: If you bunch of brats can't stop thinking about the next election long enough to transact some actual leadership, then we're going to have to let the world know how irresponsible you've been.
The world knows. We've gotten a pass thus far, but the world knows. And now, thanks to D.C.'s version of kick the can, the U.S. is going to be forced into enacting austerity measures just like those other nations who have mismanaged their economies in similar fashion: Greece, Portugal, Ireland and Spain.
Only, people in those nations have been there before. It has been a long time since voters in the U.S. have been forced to cut back on flat screens, Play Stations and fast food. And we're not going to like it.
Our politicians know this. Which is why they've been kicking the can down the road. Well, the dead end has arrived. S&P has told our appointed leaders to deal with it. Now.
What happens if Congress does not rein in the nation's $14.1 trillion national debt?
According to the president's deficit commission co-chairs Erskine Bowles and Senator Alan Simpson, "If the U.S. does not put its fiscal house in order, the reckoning will be sure and the devastation severe."
Senator Jeff Sessions of Alabama explains that the debt problem "runs the risk of a cataclysmic event, and it can happen very quickly... just like it did in Greece."
While bailed-out bankers jet set to Davos, and fiscally unaccountable Floridians walk away from their mortgages, our political class in D.C. will now contend with how to best spread the pain amongst prudent taxpayers from Syracuse to San Diego.
But fret not, modest voter. Next November you will once again have the option of choosing between door one and door two, behind both of which you will likely find the same worn diatribes that led to this morning's S&P downgrade in the first place.
If we refuse to defer gratification, if we exhibit zero tolerance for accountability, then we arrive at an ugly impasse. A land where those with no vision lead the blind into oblivion.