Sep 30, 2011
The American dream, interrupted
By Dinesh Sharma
The American century seems to come to a sputtering halt on August 5, when its credit-rating was downgraded for the first time since 1917 by Standards and Poor’s.
“What just happened?” I asked a hedge fund manager as S&P’s action chilled markets and main street. This is the first time since we have started keeping records that the America dream seems to have depreciated from one generation to the next. The fears were somewhat overblown as these are secular trends, a banker friend told me.
All is not lost, another financial consultant on Wall Street suggested. But why was I not convinced?
President Barack Obama said, “It was avoidable.” He called it a “self-inflicted wound”. He was speaking about the stalemate with the US Congress over budget and the deficit, but he might as well have been referring to the high level of spending of the past 10 or 20 years.
S&P’s downgrade of US sovereign debt sounded a wake-up call. While it was immediately labeled controversial, it may have signaled the potential escalation of systemic problems and the rise of other major economies. It certainly put a punctuation mark on Henry Luce’s American century.
As the editorials from around the world have reflected, at worst, the American dream now seems to be in a free fall and, at best, it has been interrupted for the next generation.