Time to invoke the 14th Amendment

Good morning, with 4 days left until the August 2^nd deadline, investors’ concerns on a rating downgrade and/or default is growing as both political parties push for approval of their respective plans, without moving closer to a common deal.

There is growing speculation (hope?) that the Obama administration could invoke the 14^th Constitutional Amendment (14.4) which states that “The validity of the public debt of the United States…shall not be questioned” to bypass Congress and increase the debt ceiling unilaterally (first mentioned by President Clinton). I would agree with this approach as it could save the country’s AAA rating and bring confidence back in the markets and the economy. If voters were to disagree with this move, they could make their voice heard next year in the presidential election.

The level of stalemate seen in Washington is unfortunate as it has taken the focus away from job creation, economic growth and pursuing a strategy that will maintain the country’s standing as the best economy in the world. Instead, many members of congress seem to have gone to Washington not to govern but to hijack government and the country itself. As one Chinese official mentioned, extremely irritated by this recent issue and the fact that is has come after a US subprime crisis, and a financial meltdown caused to lax US regulations: “We understand politics, but your government’s continued recklessness is astonishing.” Details below.

Have a great weekend J