Double Dipping

The market tanked Thursday on fears of a double dip recession.  S&P downgraded our credit rating from AAA to AA+ on Friday.  Should we be worried? 

It definitely seems as though there is a chance that the economy is going to start going backwards again.  Not that it was really ever charging ahead at full steam at any point during the last two years. 

Certainly the economy needs fixing, our politicians have spent the last six months trying to fix a problem they created and one that was certainly less important than trying to foster economic growth.  In some sense they "fixed" that problem when they got a debt deal done last Tuesday, but it was a fake problem and the "fix" just made people more uncomfortable.

As much as the economy needs fixing and as real as our economic woes are, the bad news from the end of last week is a reflection on the sorry state of American politics, not the sorry state of the American economy.

The market took a nosedive last Thursday on fears of a double dip recession, fears that could have been alleviated if we had actually bothered trying to fix the economy.  American politicians (I'm looking at you Tea Party) are to blame for this.  The fact that S&P downgraded our credit rating doesn't have as much to do with our spending - remember just a decade ago we had a surplus each year and were paying off our debt - it has to do with the fact that our political system has hardened into two rigid camps of people more bent on demonizing each other than working together.  One group is more guilty than the other, but both are to blame. 

Our economy is broken, but our political system may be in even worse shape.  America's broken politics are hampering our economic recovery. 

If we are going to put America back on the path to prosperity and avoid a double dip recession we will need our politicians to acknowledge what the real problems are, set aside their differences and make tough and necessary compromises.  America is going to pay our debts, but as long as politicians continue to ignore the real problems and refuse to work together then our economic recovery will continue to be as flat and stagnant as it has been for the last two years.