I am glad a deal got done, but I am not yet willing to throw a party with magicians and piñatas.
I will start good news:
- We won’t default, which I viewed as political issue, not a solvency issue.
- The spending cuts won’t be drastic and immediate like Greece.
And now the bad news:
- The USwas still get downgraded, although I am not sure how bad this actually is for interest rates.
- It showed how poorly we are governed. I don’t think anyone in Washington came out looking good after this. Politicians took something simple and necessary and turned it into a school yard name calling contest.
- The deal signifies any future stimulus is probably out of the questions. As I have mentioned before I think short-term spending is still needed.
I think how you evaluate the deal depends on your perspective. If you evaluate it on a possible catastrophe being avoided then it’s a huge success. However, if you take Armageddon out of the equation as I did (I never thought we would reach that point), the apparent removal of fiscal stimulus from the equation is not a good thing.
Note: I didn’t mention anything about long-term fiscal health because I couldn't find an objective point of view. So if you find one feel free to forward it along.
