by. Henry Meier
So in the week I was away purchasing a new house and going to visit my family in God’s Country (aka Long Island), the government solved the debt crisis it created by pushing the can down the road for a few more months. The ironic thing is that although this crisis was started by people dedicated to reducing the role of government in our lives, the end result has been to make us more dependent on what goes on in Washington.
First, although the debt limit dealestablishes aframeworkfor the Senate and the House to negotiate a 10-year budget plan by December 13th, anyone who honestly believes this is going to happen should be busy sharpening their pencilsto maketheir Christmas listfor Santa. The dysfunctionof Washington in which we lurch from crisis to crisis without compromising on a comprehensive budget plan is here to stay as long as people continue to elect House Republicans in districts gerrymanderedto produce extremist idealogues and talk radio pundits continue to extol the virtue of Senators like Ted Cruz (in truth, a few more Senators like Ted Cruz and we might as well just hand over the mantle of international leadership to the Chinese and get it over with). If there is no budget deal, another round of automatic spending cuts equalling $19 billion kick in on January 15, 2014. Plus, we could still be looking at another debt limit increase debate as early as March.
What this means for credit unions is that, while we have to remain vigilant of a grand bargain that puts our tax exemption at risk, it is time to start highlighting other parts of our agenda, such as secondary capital and MBLReform. The truth is we have too much that needs to be done legislatively to spend so much time on defense, no matter how important the goal. Don’t get me wrong, in a political environment that is this fluid, we have to remain vigilant about protecting our core interests, but it’s time to both walk and chew gum at the same time.
Secondly, the FED bond buying program will continue for the foreseeable future. Ben Bernanke cemented his reputation as the smartest guy in Washington by going against the conventional wisdom and pushing his FED colleagues tocontinuethe bond buying program when everyone thought it was time to begin ending it. Can you imagine how bad the economy would be today if the continued economic uncertainty was coupled with spiking mortgage interest rates? The down side is, of course,that your credit union will continue to have tooperate in a low-yield environment. Have fun.
