Nightmare On Wall Street Dooms Obama

History will record that Barack Obama signed away a second term in office when he approved legislation on August 2 to raise the nation's debt ceiling to an once unfathomable level of more than $16 trillion.  With a stroke of the presidential pen, Obama unleashed a torrent of economic backlash.

The stock market greeted the president's debt deal with a resounding rejection, sending the Dow Jones average tumbling 512.76 points on August 4.  The steep decline ranked as the ninth-worst in the market's history.  Staggering losses of trillions of dollars wiped out stock gains for the year.

That was significant because the market's performance was the lone economic gauge that had improved under Obama in 2011.  Jobs have wilted with the summer heat.  Unemployment bounces from bad to worst.  Home sales and prices are in the toilet.  The only silver lining was a robust stock market.  No more.

Make no mistake about it, this is Obama's debt deal.  He stiff armed Speaker John Boehner's attempts to forge a bipartisan deal.  Then the president panicked as the clock ticked down on the nation's first credit default.  He dispatched senate majority leader Harry Reid to strike a deal, any deal.

As a result, Obama was forced to sign legislation that trimmed the fiscal deficit by $2.1 trillion over 10 years in exchange for raising the debt ceiling by another $2.1 trillion from its current record level of $14.294 trillion.  The deficit reduction is to be achieved solely by slicing away at the bloated federal budget.

For months, the president and his Democrat cronies had brayed like jackasses that tax increases had to be part of any deal.  Republicans called his hand.  Obama caved for selfish political reasons.  He wanted to postpone having to revisit the debt ceiling issue until after the November presidential elections next year.

When Republicans balked at a debt ceiling extension of more than a year, the president and his mouthpiece Jay Carney resorted to lies.  They wagged their fingers at the GOP, claiming that past Congresses had reached longer agreements.  The facts say otherwise.

Since 1979, the average debt limit extension given to Treasury has been 251 days, about eight months.  The shortest increase in 1981 lasted all of one day.  The longest extension in 1997 allowed enough leeway for borrowing to continue for five years. 

Now the president is trying to placate his far left political base by suggesting that tax increases on the wealthy will be part of a bipartisan congressional committee's efforts to find $1.5 trillion beyond the $917 billion in cuts already identified.  Like a two-year old, Obama is stamping his feet to rally the Democrat Kook Klan.

Meanwhile, the grownups who actually work for a living aren't impressed.  In a recent USA Today/Gallup poll 46 percent of Americans registered their disgust with Obama's debt deal.  More than 40 percent think the agreement will do more to harm than help the economy.  Not good news for a president who believes he can double-talk his way out of any failure.

The folks at Standard & Poors also were nonplussed.  The rating agency lowered the U.S. credit rating by one notch to AA-plus, an unprecedented blow to the nation's stature as the gold standard for fiscal responsibility.  The U.S. had held the top-tier AAA credit rating since 1941, a period of 70 years.

In revising its rating, S&P argued that the deficit cuts did not go far enough.  Using government figures, the credit rating agency projected that the nation's debt level would hit $20.1 trillion by 2021, despite the reductions contained in the debt deal.  In other words, the debt keeps rising for the foreseeable future.

The loss of the triple-A rating was once unthinkable.  However, Obama's reckless spending the last two years when his party held both houses of Congress has left a financial mess that has fattened budget deficits and burdened Americans with unconscionable debt.

As a result, U.S. Treasury bonds, once hailed as the safest security in the world, are now rated lower than bonds issued by countries such as Britain, Germany, France and Canada, according to Reuters.  The Chinese, who hold $1 trillion in U.S. debt, issued a strong condemnation of the debt deal and related credit downgrade.

"China will be forced to consider other investments for its reserves," said Li Jie with the Central University of Finance and Economics.  "U.S. Treasuries aren't as safe anymore."

Who thought that China, once an economic weakling, would be lecturing the world's economic powerhouse on fiscal responsibility?  It happened on Barack Obama's watch.  George Bush was nowhere on the scene, yet Obama still found reasons to blame the former president, as he has done ad naseum for the past three years.

No matter how hard he tries Obama cannot escape culpability for the nation's economic decline.  His budgets, his spending and his deficits have shoved the country to the brink of bankruptcy.  Barack Obama owns the American economy with all its financial warts.

Don't expect the president to suddenly unveil any solutions to revive the economy.  He is too busy planning his retirement as it becomes patently obvious that voters will reject his failed presidency next November.