State and local officials sound off on debt crisis
Turn on the television, check all the online money sites or read any newspaper, and the mayhem that has engulfed Wall Street is inescapable.
The world's financial managers -- New Canaan brokers among them -- held their collective breath as the markets whiplashed through a tsunami of steep drops and rapid rallies over the course of a week.
Financial analysts are blaming the government, while everyone else scrambles to figure out what happened to their money.
State and local officials, meanwhile, are trying to sort through the damage after the markets spiraled downward Monday, immediately after Standard and Poor's downgraded the United States government's long-term debt rating from AAA to AA+.
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After a sharp rebound Tuesday, they fell back again Wednesday.
What does it all mean? It means that things are not good, financially speaking.
But all may not be lost -- depending on whom you ask.
"A downgrade in our credit rating tells us what we already know -- Washington is dysfunctional, but we shouldn't let the failures of career politicians weaken our confidence," he said.
"Confidence is a mind that we as individuals can control and will allow us to push through this trying time. The United States has the best workers in the world and the most innovative small businesses. Unfortunately, a failure of leadership in Congress is not doing them justice. We need our leaders to stop the nonsense and focus on policies that will help businesses create jobs here in Connecticut."
"As a U.S. Senator, I will focus on spurring private sector job growth through policies such as providing increased credit to small businesses, focusing on ending lingering housing instabilities and encouraging corporations to inject the trillions of dollars in capital they are currently sitting on into the economy."
Board of Finance member Neil Budnick, who worked for Standard and Poor's at the beginning of his financial career, explained why he thinks the ratings agency took the stand it did.
"When I began my career at S&P 30 years ago, analysts were taught that any rating is based on capacity and willingness to pay," Budnick said. "Although few would doubt the U.S. can afford to pay its debt, our willingness measurement took a hit by the circus like, last minute debt ceiling antics in Congress. You cannot spend more than you take in and remain AAA. AA+ is still an excellent credit rating."
State Sen. Toni Boucher, R-26, cautioned the current administration and declared it a moment everyone can learn from.
"This critical moment in the world's financial market has been coming for some time with or without a Standard and Poor's U.S. debt downgrading. It is also a teachable moment of gigantic proportion. Australia, New Zealand and Norway all have debt of less than 48 percent of GDP compared to 77 percent in the U.K., 79 percent in Germany and 95 percent in the U.S. -- the very countries expected to lead the way out of the problem," Boucher said.
"A family, a state and a country cannot keep spending more than it takes in. It is time for governments to face the music, cut back to essential services and allow the marketplace to recover. Here in Connecticut that means reevaluating the massive tax and spending plan recently passed into law and finding areas where we can reduce the size and cost of government to a level taxpayers can afford."
Boucher also believes that Connecticut will be in an extremely sensitive place as a result of all this in the near future.
"Connecticut has historically relied too heavily on the income of our most wealthy citizens to underwrite runaway government spending. Much of this is investment income which is difficult to estimate even in good economic times," Boucher said. "Given the current volatility of the stock market, Connecticut's revenue streams will be in an even more vulnerable position over the next six months. Therefore the administration must proceed cautiously as it implements its new budget. The revenues and resources they relied on might not be there after all."
Kathleen Corbet, candidate for Town Treasurer and former president of S&P, believes the AAA rating can be regained.
"The downgrade of the US government's AAA rating is a significant milestone in the financial history of our country. The immediate impact of the downgrade has sparked market volatility, widespread criticism and praise, and is certainly a blow to the collective psyche. It is not unlike receiving a grade in school that is lower than one thinks is deserved. Some may blame the teacher, others may work harder to meet the expectations of what the instructor -- or, the rating agency -- believes merits the top grade," Corbet said. "It takes a long time to lose a AAA rating. If bold, balanced steps are taken to address the federal budget deficit and debt levels, it need not take a long time to regain it."
Town Treasurer candidate V. Donald Hersam did not return messages for comment.