THEY WERE NOT AMUSED

The US Congress seems to have settled its debt ceiling problem. For now. But this is just the beginning of bigger problems.

The Representatives and Senators may feel they've done their bit for their friends (oops; I mean for their country). But how do the people of the country feel about the government of the people, by the rich, for the rich, and other political nonsense?

As the title says, not thrilled. Not by a long shot.

"How bad was the response?" you ask.

In a survey of Americans after the political brouhaha in the Capital, the people of the country have given Congress an 18 per cent approval rating. Only 18 percent. Meaning that 82 per cent were somewhere between "very displeased" and "as mad as hell, and I'm not going to take this any more!"

All this in the New York Times of August 4th.

So, the yaddering about the national debt level, which almost tipped the country into fiscal default, has given Congress the lowest approval rating on record. In light of the continuing recession, a lot of people are saying that job creation should be the priority. But that would have increased the debt, not reduced it.

And if the polling done for the Times is right, more than four people out of five who were surveyed thought that "debate" (a polite term for the "unfriendly verbal engagement") was more about trying to develop some kind of political advantage than about doing what the country really needed. And about three-quarters of those interviewed felt the "debate" had hurt the image of America around the world.

That, I guess, is the expense of "politicking." Of making sure your party "wins," whatever the outcome. Though I can hardly see how anyone could win anything meaningful in this situation.

And it showed how much trouble the Republican party will have with it's Tea Party set. Same for the Congress, overall.

There have been two major financial responses.

First, the Dow Jones has reported a sharp decline — basically meaning that many companies are worth a lot less. As are many people's stock portfolios. It's a Bear market. Over which this Bear has no control.

Second, Standard & Poor’s (the credit-rating agency) removed the US federal government from its list of risk-free borrowers. To put it in other terms, American bonds are a long way from being junk, but they are heading in that direction. S&P made the move because of its worry about the size of the government's long-term debt. Congress cut that debt by about $2.1 trillion; S&P would have preferred a decrease of about $4 trillion.

So, can you say "double-dip recession"? Sure you can.

And, while America has focused on its debt reduction debate, other factors have made the world economy even worse. I'll deal with those tomorrow.