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The Only Thing You Need to Know About the Fiscal Cliff
I’m going to lay out everything you need to know about the fiscal cliff negotiations. After reading this, you can ignore all of the media’s coverage of this topic as well as various politicians’ announcements pertaining to this subject.
All you need to know consists of just one sentence.
Politicians are in charge of this issue.
These are the same folks who haven’t even produced a budget in four years. The same folks who have run $1+ trillion deficits for four years. The same folks who rarely if ever leave office as a result of their fiscal mistakes.
In simple terms, none of the people in this group will likely suffer any consequences if we do go over the cliff. Indeed, as far as options go, their best option would be for us to go over the cliff and then implement some targeted tax breaks in late 2013 early 2014 as they go into the 2014 Congressional elections.
Let’s take the side of the Democrats.
Obama was largely re-elected based a solid turnout for the Democrats and a lack of voter turnout for the GOP. If you want to argue about voter fraud the fact remains that if there was widespread voter fraud the GOP let the Democrats get away with it. So for simplicity’s sake, Obama won based on a strong turnout while the GOP lost based on a weak turnout (Romney took less votes that McCain!).
With this in mind, Obama and the Democrats can easily argue that they have the mandate of the people for their policies. If the GOP proves unwilling to go along with their proposals, Obama and the Dems can simply take us over the cliff, increase taxes on the wealthy (which would appease their voting base) and blame the failure to reach a solution as well as the ensuing economic mess on the Republicans (much as the Dems and Obama have blamed the terrible economy on Bush).
So, truth be told, Obama and the Dems really have very little to gain politically from solving the fiscal cliff.
On the GOP side, there is little incentive to solve the fiscal cliff either. If they kowtow to Obama’s wishes, they’ll infuriate their base. And there’s no chance that they’ll convince Obama and the Dems to meet their demands of cutting spending (they sure haven’t done anything of this nature in the last two years). So the best thing they can do is simply refuse to address the problem, go off the cliff and then maintain a “we fought the best we could against insurmountable odds” stance.
So… neither the Dems nor the GOP are incentivized to solve the fiscal cliff. Both parties are best off from a political standpoint having us go over the cliff and then fighting for some kind of tax breaks/ tax relief for their bases sometime in late 2013/ early 2014.
With that in mind, we’re very likely going over the cliff in a month’s time. The whole situation has echoes of the failed debt ceiling talks and subsequent market collapse of 2011.
Indeed, the market is even mirroring its Debt Ceiling talk’s action:
Here’s the S&P 500’s recent action:
Here’s what the market looked like going into the Debt Ceiling talks of 2011.
Here’s what followed:
I highly suggest preparing in advance.
Swing by www.gainspainscapital.com for more market commentary, investment ideas, and special reports outlining specific risks and opportunities in the capital markets.
Graham Summers
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Re-value the dollar. Asshole. They've done it 3,800 times with all the other Fiats that this happened to. The average lifespan of a Fiat is 39 fucking years. Read some history Rectum.
You need to fix some of your commas vs periods. Only your GOVT INCOME TOTAL RECEIPTS chart is correct.
LM how does that comment add value exactly? My view is.....unless you have value to add STFU.
I hate English majors who nit-pick. The average person will get it.
English majors are the one's running the country and can't do the math which is why it can never be fixed...
I do not think we are going over the "fiscal cliff." Too many constituancies get burned if we do.
However, I would not underestimate the incompetence of our political leadership, therefore, I am positioned defensively, just in case.
Remember, there are 2 cliffs - a tax cliff and a sequestration cliff. An omnibus appropriations bill must be passed in the next few months regardless.
And the more important "cliff" is the debt ceiling. That's where the true leverage is for those who want to reduce spending.
Hair cuts, rescissions or sequestrations. Call it what you want. What we need is reductions in every department and agency, across the board without exception. No sacred cows and we all accept the fact that we get a little less of what we want from the government.
Yeah, congress recently had a 13% approval rating and most got re-elected anyway. Go figure.
moneybots wonders:
Why do the incumbents usually win? ... Well, obviously, the voters have no good alternatives worth voting for!
Since a handful of mass media corporations worth trillions of dollars put on puppet shows starring politicians that spend billions of dollars, nobody else can compete with that, since they are not invited to play in the mass media puppet shows, and can not possibly compete with the incumbents that were raising money from lobby groups during most of their previous terms. The special interest groups are already almost totally in control. The incumbents work for them, since they are the only significant players still left able to participate in those processes. The established systems have already been built, and there are no reasonable ways to fix anything, given that the political game was almost totally rigged long ago! The runaway triumphant corruption of the influence of money upon the political process (plus dirty tricks to top that off) has reduced the theory of a democratic republic to a being cruel joke. We are already too deep in a double-bind paradox, Catch 22 situation, where they can do anything that nobody else can stop them from doing.
It is too bad, and so sad, that the theory of a democratic republic, which is still the best thing, on paper, has been systematically subverted for so many generations that there no longer is any reasonable hope of that constitutional system being able to save itself. Almost all the politicians are now puppets of various dominant interest groups, and that is the one and only thing that they need in order to keep winning the elections that take place inside of that fake democracy, which has been so totally corrupted that there are no longer any reasonable ways to believe it would ever be possible to fix the basic problems. We are looking at politicians who are ONLY competent to serve the interests of the special interest groups that now overwhelmingly dominate all the established systems, because serving the special interest groups is the only thing that matters within the reality of those politicians' careers.
Therefore, the overall system has become a runaway fascist plutocracy juggernaut, that will continue to destroy the rule of law, which is the foundation of the theory of a democratic republic. As that system careens more and more out of control, that will eventually turn most Americans into road kill. I wish it was possible to imagine any practical and realistic ways to prevent that, but it looks way too late to stop what is already an utterly insane and out of control triumphant CORRUPTION BEING THE SYSTEM. The politicians are puppets, who have no reason to care about anything but being able to continue to lie sufficiently well to fool enough of the voters, while more truth about anything has no reasonable chance to actually compete in the political market place, because the established game is already tilted to the point where it is a vertical cliff, with the incumbents up on top of that cliff, easily able to drop rocks down on those at the bottom, while those at the bottom can do almost nothing effective to hit back.
That is how I figure why Congress can have an overall 13% approval rating, and yet, almost all the incumbents are still able to get re-elected. The ONLY requirement for a successful politician within the established system is to be able to bridge the gap between the special interest groups, and enough of the voters, by being the best professional liar and immaculate hypocrite that money can buy.
http://www.youtube.com/watch?v=swiE1Lr1gK4
Warning ~ Debt Pimps Are Taking Total Controlwow RM..you did it again with another exceptional factual statement. Now I understand why somebody like me or other ZH don't have a chinamans chance in hell of ever winning a seat in congress.
I only head of one poor person making it to the the senate but he is very wealthy now. He had to be a great liar and BS'er to not only get there but to stay there. Guess Senator Reid can be proud of his accomplishment. Smart real estate investments on land he owned before helping a bill pass to ensure a nice highway went next to it. Who would have thought that would bring the land value up. Surely he never would have guessed he could be so lucky. Some people just have all the luck don't they.
I am still doing my research trying to find somebody who left congress or the senate poorer then when they arrived. Its a tough challenge but surely one exist.
My first bill I would pass if you elect me to congress is to mandate all members home freezers be inspected for any cold cash that they don't know how it got there. I would like to liberate it for them as their contribution to reducing our debt.
Elect holdingontomypants for congress 2014!!! Send your pennies to me as every penny counts. I need a new job as my small business is dying after four years of Obama magic.
There are very, very few examples of independents winning, one being Jesse Ventura. I liked the way Ventura quoted his father talking about WHY politicians spend millions of more dollars to win elections, than they will be paid for doing their job.
P.S.
I too would like one of your jobs as a "freezer inspector" for the "cold cash" that has no good explanation how it got there!
It's that farcial "lesser of two evils" thing.
The red states/districts won't elect blue Congresspersons.
The blue states/districts won't elect red Congresspersons.
And neither will vote for a third alternative because there allegedly is "no chance of winning".
Won't or can't? In GA, you have to request a "democratic" or "republican" ballot in the primaries. In the general, this is not the case, but the game was rigged from the get-go. I held my nose and voted Johnson (Gary, that is)...he was actually on the ballot... bought and paid for as he is... The people in general don't know their ass from a hole in the ground, but in the end it doesn't matter. If it's on the ballot, the matter is already settled.
And let's not forget the GOP dimwits ran Romney.
IMHO -- The guys who made Romney their man will cave.
They aren't ideological, they are pathological
These are the same folks who haven’t even produced a budget in four years. The same folks who have run $1+ trillion deficits for four years. The same folks who rarely if ever leave office as a result of their fiscal mistakes.
+1
Here's some charts and things constructed with data right off the good 'ol SNAP website via an analyst friend:
https://docs.google.com/folder/d/0B-pimih9wLoxYWR2X0dhdDVDc3M/edit?pli=1
Original data and resulting graphs. Fun points - We're at 500% Food CPI since 1970, and close to 2,000% increase in food stamp usage per person.
Enjoy.
It looks like mediocrity has migrated from Africa to America.
Yup, and in just one generation. Still, I would love to see his college transcripts.
Mediocracy would be a huge improvement over what we have now.
Funny how the criminals have a temper tantrum everytime they are confronted about their insane theft spree. Hope you enjoy beng poor sheeple bacause they have only yet begun
We're not going over the cliff because Obama won't let sequestration take place. He will continue to raise spending at all costs and force tax increases later. The resulting negotiation in the next few weeks will be minor cuts in spending in exchange for minor increases in taxes and removing the debt ceiling. Buy gold.