Tags: 2013 | US | budget | debt

A Look Back at 2013

Wednesday, 18 Dec 2013 07:05 AM

By Ashish Advani

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As we go into the year-end, I sit back and wonder where the year went.

We certainly have had an eventful year, but maybe not as eventful as we had expected going into it.

Last year at this time we were going into the sequester, which was billed to be close to calamity, if we were to believe the president. Thank the stars we did not see major negative results of that brinksmanship battle.

This year brought its own set of debacles nonetheless.

Let's not forget the insanity around the budget approval as well as the debt ceiling. Shutting down the government instead of compromising and passing a budget was a major embarrassment for the United States on the international scene. Yet our esteemed politicians seemed to only care about hurting each other rather than saving any semblance of respect for the United States in the world economic forums.

The debt ceiling debate was just sheer insanity and played Russian roulette with the global economic system. A default of the U.S. debt, while not out of contemplation these days, certainly would have thrown the world into a tizzy and would have been catastrophic. We would have seen another global recession if that had happened. Yet the debate was framed as a Republican versus Democrat debate, not a world event. It was very myopic of the politicians to not view the global consequence of their actions. That did not bring us any accolades either.

A direct result of the debt ceiling failure was the Federal Reserve not tapering its quantitative easing program in September as the market was expecting. The near crisis situation of the debt ceiling fight, the government shutdown and the ambivalent economic growth gave the Fed a reason to pause and we are still on hold. The market believes that we will taper today when the Federal Open Market Committee ends its two-day meeting, but I do not believe that will happen. But then what do I know?

Even if we taper today or next month, I believe the markets have factored this in and will not move much.

The National Security Agency spying debacle is yet another black eye for America. We have lost more goodwill on this event than anything else we have done. Many of our allies are furious at us and we have not paid the last bill on this yet. There is more to come on this than we have seen so far.

While the farcical roll out of the Affordable Care Act had its own series of twists and failures (and it is not yet over), it certainly distracted the government and opposition. This has given even more legroom for the competitors to score major victories against America.

The Chinese yuan has been on a tear and has been posting milestone after milestone of success. The Chinese have signed a dozen more bilateral trade and currency agreements, displacing the U.S. dollar from its trade with other countries. The Chinese renminbi has become the world's second most traded currency. The euro currently trades 5 cents higher against the U.S. dollar than at the start of the year.

All in all, we have had a rather stagnating year and not many advances have been made on any fronts other than the two political parties even more bitterly divided than they were before.

If this is the state of America for years to come, why would I keep my investments here and watch it get eaten away by the hidden tax of devaluation and the unannounced inflation?

Let's just pray for a better 2014 — but not hold our breaths expecting it.

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