The tornado season this year was nearly unprecedented in scope, severity and loss of life. Several meteorological components combine to form one of nature’s most powerful forces: instability, wind, lightning and wall clouds. On the economic front, the financial markets have recently experienced a confluence of components creating a financial firestorm that has caused investors to run for cover.

At the 10-year government bond auction last week, the coupon was set at the record low rate of 2.125 percent. With this storm, it’s more about the return of the money than the return on the money.

Beginning in June, U.S. economic data began to deteriorate. The numbers related to housing, employment, business and consumer confidence worsened as summer progressed. Meanwhile Europe was politically and financially struggling to contain deteriorating sovereign and bank balance sheets. The debt crisis across the pond began leaching toward Italy and Spain, spawning questions about the viability of the European Union itself.

On top of this instability stood politicians in Washington wrangling over the debt ceiling. The nation, world and credit rating agencies watched as government leaders failed to reach a timely compromise on sensible solutions. The outcome of this political spectacle was a sharp loss of confidence in Washington’s ability to solve tough economic problems.

Finally, Uncle Sam’s credit rating was downgraded by one of the three major credit rating agencies as the credit limit fix was seen as too little, too late by Standard & Poor’s. At the heart of the downgrade is the perceived inability of our government to effectively turn the tide on the growing level of debt relative to gross domestic product.

Compromise is the settlement of differences and the adjustment of conflicting claims and principles. It’s essential to the fundamental workings of government. But today’s talking point says, “I will not compromise on my principles.” If that is the new legislative guiding light, then consistent breakdown in process is unavoidable.

For when is a principle just a special interest or money-lobbied political position? Our political system has been swamped by influence peddling, special interests and ideology. Although the majority of Americans favor a balanced and compromised approach, the political will seems absent.

At this writing, the Standard & Poor’s 500 index is several percentage points in the negative, year to date. There is a growing sense – a fear – that economic conditions around the globe are potentially much worse than forecast, although on the whole financial conditions are far better than in 2008. Nevertheless, fear has a peculiar way of creating a negative out of a positive.

The Federal Reserve has attempted to keep the economy stimulated but is running out of bullets. It is now on those responsible for the nation’s fiscal policies to step up and do the tough work. The drawn battle lines between cutting into the Big Four (Medicare, Medicaid, Social Security, defense) and increasing revenues will either be compromised, or else deeper problems await.

Peter Percival is a registered adviser at peter@ppercivalndfinancial.com.