On August 6, 2011, Standard and Poor’s, a financial-services company and division of McGraw-Hill Companies that publishes financial research and analysis on stock and bonds, weighed in on the US Government’s National Debt. After “analysis”, S&P concluded that the US Government’s Credit Rating should be down-graded from the highest ranking of AAA to the second highest ranking of AA+, but with a negative outlook. In simple English this means that the United States Government has demonstrated an inability to control spending and sustain revenue income consummate with United States National Interests. In other words, the United States Government, in good faith, can not pay its bills. The financial equivalent is that the United States Government is in default on its loans.
S&P’s analysis and conclusion is grossly inaccurate! S&P’s track record on reporting the economic health of various financial institutions has been dismal to say the least. Credit Rating Agencies (CRA’s) like S&P have been subject to criticism in the wake of large losses beginning in 2007 in the collateralized debt organization (CDO) market that occurred despite being assigned top ratings by CRA’s like S&P, Moody’s, and many others. “In November 2009, ten months after launching an investigation, the European Commission (EC) formally charged S&P with abusing its position as the sole provider of international securities identification codes for U.S. securities by requiring European financial firms and data vendors to pay licensing fees for their use”. S&P’s duplicitous actions speak for themselves.
The United States economy is larger than the combined economies of the next three largest in the world China, Japan, and India. Why is the US economy unique in the world? And why is the US economy shrinking as a ratio to other world economies? The reason is that the US economy is not a Global Economy like all the other countries of the world! In order to survive the US economy must not play in the Global Economy “free for all”. Why? Because the US economy can not compete in a Global Economy. The US economy grew after World War II because it did not play in the Global Economy. The Global Economy has been chasing the US economy right up until the 1970’s. At that time the gasoline crisis hit the United States and the US economy has been in decline ever since. At that time the United States began to play the Global Economy game. It was a game the US economy could not win. The new Global Economy was based on production costs. The United States had always played a different game and was first in the world in science and technology, engineering, manufacturing, education and thus in production. But not anymore. The United States has steadily declined in the Global Economy in engineering, manufacturing, education, production and now it is in jeopardy of losing its edge in science and technology. What the other countries can not steal they buy in cold, hard US greenbacks. The world currency is the US currency. But for how much longer?
As long as we play by Global Economy rules we are intrinsically intertwined in the Global Economy. This is a death spiral to the United States economy. Soon the United States will no longer be first in the production of energy. And once the US loses its edge in the production of energy it will no longer be able to compete in the Global Economy. How does the United States regain their global domination? How does the United States regain its premier positions in science and technology, engineering, manufacturing, education, and finally production? By listening to a voice of the past.
Doctor W. Edward Deming Ph.D. from Yale University with graduate degrees in mathematics and mathematical physics. He was a professor of statistics at New York University’s graduate school of business administration (1946–1993), and he taught at Columbia University’s graduate School of business (1988–1993). He also was a consultant for private business. In 1982, Dr. Deming had his book published by the MIT Center for Advanced Engineering as Quality, Productivity, and Competitive Position, later renamed Out of the Crisis in 1986. “Dr. Deming offered a theory of management based on his famous 14 Points for Management”. Dr. Deming believed that “Management’s failure to plan for the future brings about loss of market, which brings about loss of jobs. Management must be judged not only by the quarterly dividend, but by innovative plans to stay in business, protect investment, ensure future dividends, and provide more jobs through improved products and services. Long-term commitment to new learning and new philosophy is required of any management that seeks transformation. The timid and the fainthearted, and the people that expect quick results, are doomed to disappointment.”
For more information on W. Edward Deming, Ph.D. please see http://en.wikipedia.org/wiki/W._Edwards_Deming/. For further information please see http://deming.org/. If you are interested in W. Edward Deming’s pragmatic approach to business please order a copy of his book “Out of the Crisis” published in 1986. The book is available at