Blog – the most powerful country in the world can’t write a cheque (some quite long reflections on the crisis, and some personal reminiscences)

It is an interesting time to be a foreigner in America. This week the government was shut down, and the largest economy in the world got within a few hours of running out of money.

Proud of the Flag

At least that’s how it got painted, in reality, it wasn’t quite like that. But, as one of the many politicians put it, “you wouldn’t run a corner shop this way”. I thought that was a very British thing to say (but I have to admit he didn’t actually use the adjective corner).

One of the reason it resonates so much with me is that I am also financially un-clean. Sixty one years of age, over the last 40 years in the UK I have possessed every credit card in existence. I still remember with great joy the day I finally came to possess an Amex Gold Card, and that was over 30 years ago. Credit card companies in the UK fell over themselves to stuff plastic into my hand, and yes, too often I succumbed to their weasel words. In other words, I am viewed in the UK as no credit risk at all. In the US things are very different, and after 12 months absolutely no-one will give me a US based credit card.

But back to more important matters, and a few weeks ago in Washington DC the right wing of the Republicans, known as the Tea Party, had a bright idea. They really didn’t like the way it was all going, the Government got in the way too much, spent far too much money, and in particular these proud nationalists wanted to rid the world of Obama Care. Which I am sure you all know is America’s fairly basic attempt to put some form of health insurance within reach of the 45m who don’t currently have it. These folk who would figuratively dump the tea in the harbor are an interesting bunch. They are concentrated in certain states, they certainly are not poor, but they are very noisy. I should explain to English readers that America has an interesting parliamentary system, based on three tiers, who need to work together to get laws passed.

At the top is the President, and as you all know Mr Obama is a Democrat, described as a communist by many Americans, but in UK terms he is slightly to the right of the current UK Conservative party. But he has an agenda, yesterday he announced that following up his success in this battle, he next wants to legalise 12m illegal aliens. He obviously likes a fight. Then below the President you have two houses of congress, the upper house, the Senate (which is currently Democratic as well), and the lower one, the House of Representatives, known as the House.

The Waterboys Live in Boulder

The Waterboys Live in Boulder

The problem is that, unlike in the UK, the elected members (including the President) go through the democratic process separately, often at separate times, and so politically they get out of alignment.

At this point I have to admit that it is a bit rich for an Englishman to lecture anyone on democracy. Our second legislative house is inhabited by cronies of the political elite, and is completely unelected. Our head of state is a queen, and you can’t get much more daft than that, but strangely enough it does work. Most of the time.

In America, the House is now Republican, and they are sticking their heels in and picking a fight over the size of the budget. America owes $16trillion, and everyone agrees something needs to be done, but the President is not giving up on his health care reforms, and so the current fight began. Obama Care was passed through both houses, and effectively Obama has won two elections on this platform, but the reality is that some Republicans would go to any lengths to repeal it.

The key issue is, that political parties in the US do not hang together as one entity like they do MOST of the time in the UK. And despite their leaders’ wrath, the Tea Party faithful thought they could threaten to bring about the end of the financial world as we know it, and thus hold the country to blackmail, but they misjudged the mood of the country. Obama wasn’t going to budge, the majority of America didn’t like what they were doing, and the game was up. No Tea spilling, and no welcoming light in the harbour.

78000 in the Broncos Stadium

78000 in the Broncos Stadium

I guess that a period of 2 weeks when Government employees weren’t paid isn’t that significant. I suspect the average American is far more embarrassed than is warranted, and the rest of the world outside of the financial and political circles didn’t really notice. But the real problem is, what happens next? There are around 435 elected members of the house, of which 230 are Republicans. The problem with this system is that they must put themselves up for re-election every two years, and so they are always looking towards the electorate. This is a good thing in some ways, they are called the House of Representatives, they represent their people, but the problem is the way it influences their behaviour.

There are probably only 40 Tea Party affiliated members of the House, but many others are under threat of de-selection. Unlike in the UK, these elections have “primaries”, ie the sitting candidate is rolled out against challengers before he has to fight the real opposition. And the Tea Party has money, lots of money, to spend on campaigns to oust the Republicans that they feel are not voting their way.

This is certainly not democratic, it is driven by money, and it feeds a widening gulf in American society. Around 50m Americans survive on food stamps, and about 30% of households receive some form of social benefit. Before the last election Romney (the losing Republican) said that 47% of Americans were dependent on Government handouts. As the outsider, I have to believe this gulf between the Tea Party and the majority can only get wider.

Snow in October - but then the sun comes out

Snow in October – but then the sun comes out

However, all of this palaver this week has been a personal inspiration, and I have finally come up with a solution to my own cash problems. I am going to put $1000 on a 3 legged accumulator……the politicians to be back sitting on their fiscal cliff next February, a Government shutdown of at least 4 weeks next time, and Senator Cruz (the new Tea Party star) to lose the next Presidential election to Mrs Clinton.

I love capitalism, isn’t it great?

And my memories of Amex, well they are a bit clouded. One day in around 1984 the Lloyds Bank manager called me in to his lair. I remember it well. I smiled at him, he was an old grey haired man, sitting in a wood paneled right on the corner of Baker Street and Marylebone Road room. He then explained, in a very aggressive manner, that he expected me to pay back the money I owed on the Gold card immediately. I learnt my lesson, I went over the road to the Globe and had a warm pint, and turned over a new leaf.

Yeh, right, just like the US government has. This must be why I love America so much.