Congress Took the Weekend Off

            Yesterday I blogged that nothing short of a bill signed into law before 9:30 AM EST Monday could rebuild the market’s confidence sufficiently to prevent a massive sell-off.  Well Monday is Columbus Day; which makes this a three-day, holiday weekend.  And guess where the members of the House of Representatives are?  They are at home, enjoying the long weekend while our government is shut down and our national credit card is about to hit is max out.  Yes, they will get paid for the holiday as workers in the hospitality industry near our national parks are laid off due to the inability of tourists to visit.

The Senate stayed in Washington this weekend.  The Senators should be thanked for their honest effort.  However, the story is not about the Senate.  Everyone knows that the Senate has the decorum to work in a bi-partisan manner.  The headline of the weekend is that talks between Speaker Boehner and President Obama have broken off.  The House will not be open for business until Tuesday afternoon and Treasury Secretary Lew has told us the United States will no longer be able to borrow any money beginning on Thursday, October 17^th.

Emotions between the Tea Party members of the House and the White House are raw.  The House needs one more round of venting their frustration before cooler heads will prevail.  That means no bill can become law until Thursday at the earliest.  That is the best scenario and it butts way too close to the deadline Mr. Lew established.  The credit rating of the United States will be lowered yet again.

Last time we had a raise-the-debt-ceiling fight (August, 2011) Standard & Poor’s (S&P) lowered our credit rating from AAA to AA+. S&P lowered the rating four days after Congress had passed the bill to raise our debt ceiling.  The other two rating agencies, Fitch Ratings and Moody’s did not lower the United States rating – they continue to this day to rate the United States credit with a triple-A score.  However, both Fitch and Moody’s did change their outlook on the US credit rating from positive to negative.  Moody’s did this on 6/2/2011 and Fitch did it on 11/28/2011.

It will not take until four days after the eventual bill that raises our debt ceiling for Fitch and Moody’s to lower our credit score.  If you are an investor, you should have taken all your money out of the stock market on Friday when the White House delayed their daily press briefing until after 4PM so that their bad news would not impact the market.  They were hoping to create good news over the weekend so that the markets would not crash and burn.  Have you heard any good news?  No good news most likely means Fitch and Moody’s have to lower their score before Thursday comes.

The previous blog entry describes why Congress’ inability to function will have a devastating effect on a county that is about to implement the largest social program since Medicare – and the most complicated ever.  Washington’s inability to function in a time of great change portends huge problems in the market without the ability to make the necessary policy adjustments to maintain a stable market.  We deserve to have our credit rating lowered – and it will be soon.

I hope the Representatives have a very happy Columbus Day.