Sunday, August 07, 2011

Is that a Tear Rolling Down Alexander Hamilton's Cheek?

Alexander Hamilton was a pesky immigrant who saw Great Britain's creditworthiness and thus ability to borrow as important to its standing as a superpower as was the British navy.  As the republic's first Secretary of the Treasury, he set the U.S. on course to creating the dollar as the world currency built on the credit worthiness of U.S. treasury bonds.

Pity Mr. Geithner who fate it is to have Hamilton's job when we suffer the indignity of a credit downgrade.  Standard and Poor's announced after markets closed Friday that America's bonds have fallen from AAA to AA.

The announcement brought quick reactions.

Guess who said the following?

"The U.S. government has to come to terms with the painful fact that the good old days when it could just borrow its way out of messes of its own making are finally gone...
A little self-discipline would not be too uncomfortable for the United States, the world's largest economy and issuer of international reserve currency, to bear.

"For centuries, it was the exuberant energy and innovation that has sustained America's role in the world and maintained investors' confidence in dollar assets. But now, mounting debts and ridiculous political wrestling in Washington have damaged America's image abroad...
All Americans, both beltway politicians and those on Main Street, have to do some serious soul-searching to bring their country back from a potential financial abyss."

(A) A big bond investor
(B) A foreign upstart
(C) A news service
(D) All of the above
(E) None of the above

The correct answer is (D).  Saturday, in the wake of the downgrade,  Xinhua, China's official news service editorialized the words you just read.  The signed editorial was attributed to Yamei Wang.  It is embarrassing to be lectured by China especially when China is calling a spade a spade.

1 comment:

Anonymous said...

Hamilton brought the first central bank into existence and generated the most long lasting controversy that spanned a longer period of time than even the battle over slavery.

The money battle, as I like to call it, has ebbed and flowed since Hamilton's reign at treasury, but in todays political battles where a Ron Paul has brought disparate politicians like the conservative senator from South Carolina, Jim DeMint to co-sponsore with the far left Vermont socialist senator Bernie Sanders legislation to require an audit of the Federal Reserve, one can see that the money battle is continuing.

If one wants to enjoy this "battle" as viewed on the internet, there are three wonderful videos that all have catchy music attached. If one searches for "Bernanke music video," or "Hayek versus Keynes," one will get links to the various Utube locations where you can view/listen to these amusing videos. The Bernanke video has an interesting pedigree since it was put in place by Columbia Business School (CBS) students upset that their dean, Glenn Hubbard, was not selected to head the fed and this plum appointment went to a Princeton professor (a colleague is the economic crank and loony left NYT columnist Paul Krugman) Ben Bernanke instead.