Standard & Poor’s stunned the world Friday by announcing that the rating agency was downgrading U.S. debt from AAA to AA-plus. The distinction is minor, and the effects will likely be minimal but the market was frightened, as the move was very symbolic. The message was that U.S. Treasurys aren’t a risk-free asset, which really shattered investors’ confidence more than anything else.
President Barack Obama decided to give a speech on Monday about this historic event, as the markets were tanking. The speech was unanimously criticized across the political spectrum. Colleagues of mine in the hedge fund industry, many of whom had voted for Obama, were absolutely furious at him.
The markets started to tank even more after the horrendous speech. Obama started the speech by criticizing the Republicans for their tactics in the fight over the debt ceiling. He also criticized the uprising in the Middle East, which Obama supported. President Obama also called for tax increases in the beginning of the speech!
I can go on and on, but instead of offering some common sense advice to Obama, which he is so dearly lacking, here is the speech Obama should have given:
My fellow Americans,
On Friday we learned some news that calls all of us to come to action. Standard & Poor’s downgraded our debt by a notch. While this step will not have a large effect on the economy, it is a wakeup call for all us to realize that the current fiscal path we are on is unsustainable.
I am announcing two immediate steps that will dramatically boost our economic growth. I will remove all the burdensome regulations my administration made on drilling for natural gas, and for oil in ANWAR and in the Gulf of Mexico. In addition, while drug companies are spending billions on researching new drugs, the FDA is routinely turning down lifesaving drugs.
I am calling for the immediate removal of the head of the FDA, and I will ensure that these obstacles, which haven’t only been a damper on the economy, but also cost lives, will be stopped.
However, more important than specific policies, I speak to you as an American and not a Democrat or Republican. This is the greatest country in the world, and despite the current slow economy, it will continue to shine.
As Warren Buffett has said, no one has made money being short America. America has innate characteristics that make it the best country on Earth. As Milton Freidman pointed out decades ago, Singapore became one of the most vibrant economies despite lacking natural resources, solely due to its capitalist system. The same is true in America, where people still risk their lives daily to get on boats (made out of anything that floats) from Cuba in a desperate attempt to reach American soil.
Again, as Warren Buffett said, “this country works.” I cannot predict what the stock market will do in a minute or a year, but I can promise you that as a fellow American, I will continue to ensure that the dream of America I grew up in continues.
Today we are all Americans, and we must look past the current bad news and remember that this country really does work.
On that front, I will remove obstacles preventing this growth and entrepreneurship, and whether Standard & Poor’s agrees or not, make sure this country continues to be the best country on the planet.
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