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Bowles, Simpson and Tough Love
Gents,
I first went to Medellin when the exchange of $1 USD was about $2, 500 COP. Currently the exchange is hovering around $1, 800 COP.
I have asked many people including Colombians what the Colombian pesos is based on or against that props it up so well against the dollar. I have never been given a satisfactory answer. And how could they answer? It really is not Colombia doing well that has caused the devaluation, it's the American deficit that is causing the problem.
Actually all along though I have known that America's financial troubles keeps the dollar weak against many foreign currencies. So I was actually happy to see that Obama had the foresite to appoint a commision to point out some hard to swallow facts and recommendations to get out house in financial order.
It frankly acknowledges what most politicians are too cowardly to admit — that deficit reduction will require shared sacrifice.
Although the commission, headed by Erskine Bowles and Alan Simpson, points out that road to recovery is a long and tough one, I would be ever so grateful if the days of the USD exchange would once again hover ever so close to the 2003 high of nearly $3,000 COP to $1 USD.
Then maybe I would cave in and pay independent girls in Medellin the seemingly average asking rate of $150,000 COP for an hour (which I refuse to pay currently).
This an excerpt of a newsletter released today:
Everybody wants to get America's fiscal house in order, but few are willing to embrace the painful steps necessary to accomplish that.
If Erskine Bowles and Alan Simpson didn't already know that, they are learning it now in the wake of the release of a partial draft of their plan to reduce the national debt and deficit.
Bowles is a Democrat from North Carolina and the outgoing president of the UNC system. Simpson is a Republican and a distinguished former senator from Wyoming. They are the co-chairmen of President Obama's bipartisan Debt Commission.
Cuts Will Take Courage
The Bowles-Simpson report recommends about $1 trillion in new revenue that would be accompanied by $2. 2 trillion in spending cuts and almost $700 billion in interest savings over 10 years.
From the Democratic side, outgoing House Speaker Nancy Pelosi and the AFL-CIO? Rejected the Bowles-Simpson draft because of those spending cuts and the proposed steps to get Social Security under control.
Short-Term Pain, Long-Term Gain
The report notes that a gasoline tax increase of 15 cents per gallon, though not popular, would generate billions in extra revenue and put more pressure on America to reduce our out-of-control demand for oil, most of it foreign.
It is questionable if the suggested cut of $100 billion in military spending would affect our readiness and create trickle-down economic hardship. However, it would do wonders for the budget, while helping America to face the fact that it can't keep playing the role of world policeman.
Getting Social Security expenses under control by things like higher retirement ages and lower cost-of-living adjustments would require belt-tightening in millions of American homes that are already under a strain. But more importantly it could also help assure the fiscal survival of a program whose current road to collapse by 2037 would create infinitely more suffering.
Bowles and Simpson aren't saying any of this would be easy. But instead of finding fault with their ideas, we should all be thanking them for having the courage to tell us unwelcome things that we need to hear.
Sorry for the distraction but I was kinda getting bored with retoric currently being rehashed on this thread.
However it is something to think about since it seems across the board that it is costing more and more pesos to keep these Paisas happy.
Cheers,
Cubanut