As part of Big Daddy’s Bike Shop’s Talent Identification Program, the management sent their top-shelf player, Tom Smith, to a bicycle conference in Wisconsin. He only crashed once, but it was a $7,000 bike.
If you bust your butt you may as well go in style. My task was to drop in on his mom and make sure nothing went awry while Mr. Smith went to Wisconsin. Being a fiduciary and in complete disclosure, I had a secondary agenda since I wanted to upgrade my position on the Grace Smith lemon pie list. A NOLA refugee bearing gumbo thwarted my effort but that’s OK. Talent should rise to the top.
During our visit with Grace, NOLA Richard and I opined over the budding South Walton construction boom. Richard and wife Teresa had scouted several neighborhoods before settling in Blue Mountain. The new construction in the subdivisions that didn’t make their cut was pleasantly remarkable. If the mini-construction boom looks good, take in mind failing to raise the debt limit could stop our budding recovery. Yes it could.
In a 1983 letter, President Ronald Reagan harangued then-Senate Majority Leader Howard Baker: “Denigration of the full faith and credit of the United States would have substantial effects on the domestic financial markets and the value of the dollar in exchange markets.”
Looking in the rear view mirror, Reagan’s 1983 prophesy, “The full consequences of a default — or even the serious prospect of default — by the United States are impossible to predict and awesome to contemplate,” came true. In 2011, the razor thin margin avoiding default caused the first downgrade of America’s sovereign debt in our history. After Standard & Poor’s took away our AAA rating financial markets swooned but a little known fact is job growth fell for the next quarter also.
In a twist, Reagan was strong-arming Sen. Baker, a Republican, since legislators, including then-Sen. Barack Obama in 2006, have pushed back against debt ceiling increases. It’s time to stop this silly little game. Way too much is at stake. The world’s reserve currency, the American greenback, cannot be treated with disdain. President Obama admitted his vote against one of George W. Bush seven debt limit increases was a mistake. For the record, President Reagan raised the debt limit eighteen times.
As a financial professional, I realize the importance of sound fiscal policy. Failure to raise the debt limit is as close to sound fiscal policy as Vandy is to the SEC championship game. The debt ceiling melodrama reminds me of the final scene in "The Planet of the Apes" when George Taylor, played by Charlton Heston, sees the collapsed Statute of Liberty and falls on his knees screaming, “You blew it up.” Let President Reagan’s admonition be a solemn warning to the wise.
Raising the debt limit only covers previously authorized spending and should be likened to not paying a credit card bill. The Congressional Budget Office revised their numbers last May and projected debt as percentage of GDP would be lower this year (4 percent) than any year since 2008 due to an improving economy. http://www.cbo.gov/publication/44172
Yes we have some good news, but let’s not make things worse.
Buz Livingston, CFP, has the only investment management and financial planning firm in the entire world headquartered in Blue Mountain Beach. He helps clients along Florida’s Emerald Coast and around the country with financial decisions. Contact him at 850-267-1068 or www.livingstonfinancial.net. He’s a tweeting fool, follow him @BuzLivingston.