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Mayans Forecast Boehner Fail?

Bruce Krasting's picture





 

 

 

Is it possible that the Mayans, in their infinite wisdom, somehow anticipated that Boehner would fail to bring any legislation that might patch the cliff? The Boehner “fail” happened last evening, it was already 12/21 in Asia. So far, the Mayans’ timing for the Beginning-of-the-End is spot on. The cracks in the system have been spreading ever since the fateful no-vote in Congress last night. At this point, we are faced with the very real prospect that those cracks will get longer and wider in the next few days. If this happens, people will start falling into the widening rifts.

 

I have watched, read and listened to almost all of the endless discussion on the topic of the cliff. I’m convinced that there is not a single commentator that has properly evaluated the economic consequences of failure to address the deadline that is now just days away.

 

All the analysis I’ve looked at considers the consequences to the 2013 economy of changing tax rates and reduced spending that will occur if no deal is reached. But this does not include the consequences of the retroactive tax increase for 2012 that will take place.

 

I wrote about this on November 14 (Link). To repeat, if we go off the cliff, as many as 60 million taxpayers will be forced to file a separate Alternative Minimum Tax form (unbelievably complicated). Of the 60 million, as many as 33 million will be faced with a higher 2012 tax bill. This will result in some folks digging into their pockets to pay Uncle Sam the extra $3,000 to $4,000 this will cost (a disaster for some). Others, will get a smaller refund that they think they are due (bye-bye to that trip to Disneyland). The numbers are big. The "surprise" 2012 tax that the cliff will bring comes to a very lumpy $100-120 Billion.

 

The drag from the 2012 AMT look-back will be felt in the first quarter. It will “feel” as if this is a 2.5% reduction in 1stQ GDP just from the AMT. By itself, the retroactive AMT tax will produce negative economic growth. ADD to this, the fiscal consequences that kick in on 1/1/13. If spending is adjusted by this much, it will translate into fall in economic activity in excess of 4% in the 1stQ. If the year gets off to such a dismal start, the US will face a technical recession in the first half of the year, the full year will be lucky to breakeven.

 

A very steep drop in activity in the USA for the next three-months is not in the market’s mind today. It’s as if investors have forgotten that Europe and Japan are already in recession and China is still a question mark. Now we face the prospect of a very hard landing for the US.

 

Maybe the Mayans had it right all along…..

 

 


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Sat, 12/22/2012 - 16:48 | Link to Comment janus
janus's picture

funny the places you can find prophesy -- seems it's everywhere these days:

http://www.youtube.com/watch?v=KqEVYbPw9lI

majik beans!

janus

Sat, 12/22/2012 - 16:56 | Link to Comment janus
janus's picture

awww, what the hell?

why not?

http://www.youtube.com/watch?feature=endscreen&NR=1&v=q4fXllxQa1Y

wierd, huh?

janus

Sat, 12/22/2012 - 17:16 | Link to Comment janus
janus's picture

http://www.youtube.com/watch?v=LGdKwvx0_rQ

 

mad-madame mimm, i'm about to do you in.

janus

Sat, 12/22/2012 - 14:47 | Link to Comment GMadScientist
GMadScientist's picture

Plan Z:

- Rates are permanently set to log(income/1000) * e * pi

- Mort interest deduction is "faded" using (100 - the above)

- Means-testing for SS and Medicare

- SS payroll tax goes up (sorry 99%)

- Medicare and SS eligibility age +2 years

- Chained CPI

 

Sat, 12/22/2012 - 16:06 | Link to Comment disabledvet
disabledvet's picture

you seem to be arguing the alternative is better. so does the author. i'm sorry..."there's an easier way"? i'm all ears is there is...

Sat, 12/22/2012 - 19:43 | Link to Comment GMadScientist
GMadScientist's picture

Nope. It's my legit suggestion (other than the tongue-in-cheek math joke about specifying a continuous curve for the tax rate so that the average joe would need to do integrals to file his taxes).

The 'Z' is because it's the last plan they'd actually try. ;)

Sat, 12/22/2012 - 14:29 | Link to Comment Joebloinvestor
Joebloinvestor's picture

Seems like these "civilizations" created calendars as a "feel good" optimistic assessment of how long they would be around.

The Mayans were just overly optomistic.

Sat, 12/22/2012 - 19:44 | Link to Comment GMadScientist
GMadScientist's picture

Nah, just fit the scale of the phenomena by which they were judging said passage of time.

 

Sat, 12/22/2012 - 12:14 | Link to Comment ISEEIT
ISEEIT's picture

Color me crazy, but Bruce...Really?? You don't understand that this IS ALL mapped out??

Look around you dude, contemplate upon the changes that have occurred/happened.

Difficult to catch?

Of course they are.

I know that I'm crazy. I'm grateful for being 'crazy'.

This shit doesn't make sense...BECAUSE IT DOESN'T MAKE SENSE.

It is Evil.

And as complicated as we are propagandized to consider/evaluate that truth to be.

It remains true...and simple also

Sat, 12/22/2012 - 08:01 | Link to Comment Coldfire
Coldfire's picture

All this faux concern as the tax rates on the middle-class rise. Good luck increasing total revenue, fedgov. You really are this retarded. Pox, houses, etc.

Sat, 12/22/2012 - 11:12 | Link to Comment covert
covert's picture

what they really hate is when you secretly make your money grow and live it down. a lot of the "homeless" are secretly multimillionaires.

http://covert.ias3.com/forums/

 

Sat, 12/22/2012 - 04:33 | Link to Comment newbee
newbee's picture

I hadn't heard this AMT aspect Bruce, excellent post as usual, thanks.  BTW, we're screwed, as usual.  But at least I'm further along to the "acceptance" stage rather than staying trapped in the "anger" stage.  Who's John Galt again?

Sat, 12/22/2012 - 08:57 | Link to Comment Setarcos
Setarcos's picture

"Who's John Galt again?"

Answer: a figment of Ayn Rands fevered mind, though worshipped by the likes of Alan Greenspan and Ron Paul.  Go figure.

Sat, 12/22/2012 - 03:25 | Link to Comment AnAnonymous
AnAnonymous's picture

Mayans had it right. They correctly computed that their calendar cycle would end the day it ended.

But, 'americanism' is 'american' does so 'americans' will keep tying up their own fantasy with mere facts through degeneration.

The mere reality about the mayan calendar is not enough sexy for 'americans'

After all, 'americans' use a short cycle calendar that rotates on a 365 days basis.

Compare with the mayan calendar whose cycle runs over 1872 days...

Yep, less causes to party, less causes to consume...

Sat, 12/22/2012 - 03:37 | Link to Comment magpie
magpie's picture

Mayan citizenism had far less to consume anyway, like parakeet feathers and jade jewelry. I don't know how you came up with the degeneration part, recently having stated that "Americans" like doubling down and general acceleration.

In fact the "American" (election) cycle like the Western European/Babylonian/Hellenistic Egyptian calendar is 4 x 365.25 days.

Sat, 12/22/2012 - 03:00 | Link to Comment q99x2
q99x2's picture

Women for Obama will make sure things proceed here as they have in Greece. And as I remember the Government issues the GDP numbers. We are doomed.

Sat, 12/22/2012 - 04:15 | Link to Comment magpie
magpie's picture

Balanced budgets are a war on wimminz, you recalcitrant and malicious cad /sarc

Sat, 12/22/2012 - 01:09 | Link to Comment Clowns to the l...
Clowns to the left_ jokers to the right's picture

Unless the end of the Mayan calendar had an image of a donkey with its tail between his legs with a head that looked like a weeping boner, I'd say this is a reach.

Fri, 12/21/2012 - 17:46 | Link to Comment negative rates
negative rates's picture

After plan B failed, one must now move on to plan C. And trust me, you ain't gonna like plan sea.

Fri, 12/21/2012 - 17:45 | Link to Comment monad
monad's picture

All this fiscal cliff bs is as arbitrary as daylight savings time, and as fake as MSM. Its a finger job to open us up for the Obamasnare dick of death.

Fri, 12/21/2012 - 17:00 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Bruce - What is this BS (you and lame Stream Media) about "Boehner's Fail". Are you suggesting Boehner's Plan was as incomprehensible as that put forward by Obama ?

Are you suggesting Boehner should have moved toward the Obama's Evita / Il Duce like plan ?

Perhaps you should comment on what "Fail" is.

Fri, 12/21/2012 - 19:25 | Link to Comment Bruce Krasting
Bruce Krasting's picture

Plan B was a show pony. It was supported by all of the Republican "names" in the House. Boehner was on TV earlier in the day. He flat out said that his Bill would pass.

But he FAILED. He did not deliver. Nix. Nada. Not even Dick's hatband.

So Boehner has ZERO control of the House Republicans. He FAILED as leader of the House to to ANYTHING.

Now, if Boehner can't get his own guys to sign off on his own Bill, then what do you think the chances are of getting something sponsored by the Senate (Democrats) passed??

ZIP. NADA. MoveOn.Com, Not happening.

To me, the FAILURE of Boehner to control the House is evidence that we are going off the cliff. The market read it that way, futures were limit down after Boehner FAILED.

Boehner is supposed to be running the House. He's running a circus.

Fri, 12/21/2012 - 23:38 | Link to Comment dexter_morgan
dexter_morgan's picture

How many RINO votes would a dem sponsored bill need? What if all the repub just voted present. I have no doubt a dem sponsored bill would pass with 100% of the dems and enought RINO to get it through. Boehner failed just as the mainstream republican party is failing, because they are different in form but same in function to democrats, and they are resisting any change coming up from the grass roots like the tea party and Dr. Paul. So, as a party, or faux party, they are dead. Whether, and how long it will take before they realize it will be interesting. They basically went out of their way to alienate younger voters that had glommed on to Dr. Paul's message of liberty, and this current group of assclowns will never get them back.

Sat, 12/22/2012 - 16:13 | Link to Comment disabledvet
disabledvet's picture

we already have a bill. it's called "the cliff." eh, let's go over it. Bruce is buying into the theater of it all...but the bottom line is that the psycho left's bluff has now been called...nothing more. move along...

Sat, 12/22/2012 - 16:27 | Link to Comment dexter_morgan
dexter_morgan's picture

Good point.

Fri, 12/21/2012 - 22:00 | Link to Comment DeadFred
DeadFred's picture

But what else would a clown run?

Fri, 12/21/2012 - 16:34 | Link to Comment Element
Element's picture

A slightly Boehner-centric view of cosmology there Bruce ... surely they were not thinking that petty.

Fri, 12/21/2012 - 15:39 | Link to Comment theprofromdover
theprofromdover's picture

The goddess of unforeseen consequences is waiting in the wings.

They expect people to volunteer to pay up? There will come a tipping point.

I suggest a trickle, then a stream, then a flood of withholding.

Ben better crank up the printers some more.

Fri, 12/21/2012 - 14:08 | Link to Comment the grateful un...
the grateful unemployed's picture

maybe you can bring me up to speed, i know the AMT was starting to reach into tax brackets where it was never intended to reach, but that was before 2008. the average taxpayer has dropped at least one bracket since then, and 75K is a lot of %#^ income. and how does it affect the quote, small business owner? i am really concerned for this guy, and how can you avoid getting caught up if you are an SB owner, can you incorporate or something? there must be some ways for SB owners to avoid getting caught in the revised tax cuts, though GOP wants to close loopholes.

Fri, 12/21/2012 - 15:51 | Link to Comment Panafrican Funk...
Panafrican Funktron Robot's picture

In the absence of an AMT patch, it would revert to $33,750 for singles and $45,000 for married filing jointly.  They generally pass the patch to get it back up to $48,450 for single and $74,450 for married filing jointly at the very end of the year.  In the absence of modification to the Budget Control Act of 2011 (ie., the fiscal cliff legislation), this patch would no longer happen.  The general expectation is that they pass a patch shortly into January.  Additionally, the Senate will likely pass a bill moving the "under 250K" tax bracket back to Bush era, which will likely pass the House.  So, all of Bruce's arguments here really don't apply to the middle class. 

Sat, 12/22/2012 - 00:33 | Link to Comment the grateful un...
the grateful unemployed's picture

if the AMT numbers (w/o patch) become law there will be tax revolt, which always favors the GOP. there are a lot of pensioners pulling down that kind of money. but why argue over old legislation no one really likes, why not settle it next year with new tax legislation. but i would call that 33-75 jointly middle class, if you were suggesting it was upper middle class,  maybe that's more realistic, but in CA its not that much. 

Fri, 12/21/2012 - 22:23 | Link to Comment andrewp111
andrewp111's picture

Not so fast. How do you know the Senate won't bundle poison pills into the bill that the House will refuse to pass. You know, stuff like gun control, new benefits, immigration amnesty, union rights, whatever. I expect the Democrats to do something like this in order to force through their priorities.

Fri, 12/21/2012 - 14:39 | Link to Comment Bruce Krasting
Bruce Krasting's picture

What was your actual tax rate in 2011. What was your income, what did you end up paying the IRS?

For the vast majority of American this percentage is less than 28%. With AMT, those making ~$75K would face a minimum tax of 28%.

That income group includes lots of small businesses. All Docs, most in insurance and banking, a nurse is making that. A teacher might make that much, or a couple may make enough to get hit.

There is no way "around" AMT. That is why they patched it for the last 10 years.

Sat, 12/22/2012 - 02:21 | Link to Comment Marley
Marley's picture

Try 38%.  Falling over "the cliff" is the only way taxes can be raised and the politicians save face.  Do you really think Boehner's plan was going to pass?  Welcome to the Alt Min baby.

Fri, 12/21/2012 - 22:28 | Link to Comment andrewp111
andrewp111's picture

Well, how come they can never pass a permanent patch? It is always a one year thing.

Sat, 12/22/2012 - 10:01 | Link to Comment Bruce Krasting
Bruce Krasting's picture

If they let AMT hit taxpayers as the law is now written, it would increase total taxes by $1T over ten years.

But, as I've been trying to say, this is NOT a top 2% tax. It is the bottom 98% who will be hit. So as taxes go it is regressive. DC does not like that (understandably) so they have patched it.

Fri, 12/21/2012 - 17:54 | Link to Comment negative rates
negative rates's picture

I'm all for it, jack of all trades and a master of one, is what it takes to survive today. Bring it on!

Fri, 12/21/2012 - 13:27 | Link to Comment Eric L. Prentis
Eric L. Prentis's picture

 

Bruce Krasting, and possibly ZH, shilling for the financial elite and big business—who are pressuring President Obama and Speaker Boehner to rush into a deal this year, using their dinosaur media TV, radio and newspaper corporations. Bruce, save us your ferocious fake fury on the blogs. Everything can be responsibly taken care of next year, in the 113th Congress.

Fri, 12/21/2012 - 19:33 | Link to Comment Bruce Krasting
Bruce Krasting's picture

I love this. ZH and I are "shilling" for the elite.

Eric, just what planet have you been living on the past four years?

As for the 113th "taking care" of all this in a month or two, well, stayed tuned. I don't think this is as easy as you make it out to be. You scramble these eggs now, you will not be able to make an omelet in March.

Sat, 12/22/2012 - 10:09 | Link to Comment Widowmaker
Widowmaker's picture

100% bullshit.

Bruce some of us have been here long enough to read you preaching that TARP was a good thing!!

TARP was the dying vestage of a free market, and you cheered for the banks.  You put crooked business and crime ahead of 300 million people, families, and lives.  TARP paid the banks payroll and recored bonuses in 2008, nothing more than failure rewarded.

Your precious banks are the downfall of the rule of law, free markets, and the USA itself.

YOU ARE A SHILL FOR THE BANKS AND ABORTED CAPITALISM -- YOU ARE AGAINST THE REGULAR GUY.

Now you get to watch the USA crumble and you can trolly off back to Sweden (or wherever the fuck you're from), which was the Krasting plan all along.

Money cant buy class, and you got no shame.

Sat, 12/22/2012 - 10:15 | Link to Comment Bruce Krasting
Bruce Krasting's picture

I never said TARP was a "good" thing. I did, back in 2008, say that the world was on the edge of a cliff and that emergency measures were necessary to avoid a complete collapse.

I did not then, nor do I now, advocate big government bailouts. But it was my view that we were sink or swim, and in 2008 swimming also meant bailing.

Now, four years later, all of the banks have paid back the TARP money. Treasury made a profit on this. AIG has paid back too. The losses at TARP (if any) will come from the bailouts of GM and Chrysler. I was never a fan of the car bailouts. I thought they should have been dealt with separately from the troubled financial institutions.

So you're wrong on TARP and what it did, and what was the end result. But you are also wrong about me.

If you read the 1000 odd articles I've published, you could not help but conclude that I'm very much on the side of the "regular" guy.

Sat, 12/22/2012 - 10:55 | Link to Comment Widowmaker
Widowmaker's picture

Listen to you!  THE SKY WOULD HAVE FALLEN!  Dodging every point except that which concerns your own skin.  You are on the side of aborted capitalism and failure rewarded (which only benefits bankers like yourself).  "I was never a fan of the car bailouts," why, because it was less for the criminal banks?  Bailout competition from the guy against bailouts?

Who the fuck do you think REALLY paid back TARP, Bruce?  

Was it those denied a decent return on savings to paper over the crimes of the banks?   YES!

Was it higher taxes for the 98%?  YES!

Was it the mark to fuckall accounting gimmicks in the banks to this moment?  HELL YES!

Nothing has been solved, matters are worse and yet you celebrate a victory of TARP.

Worst of all you fail to recognize the undermining of confidence in your fraud-fiat system.  You fear a collapse because it means bankers would lose.  What the markets truely need is collapse.   Total destruction of the racket you pawn off as finance.

Either the markets collapse or capitalism does.  Denying one over the other only assures both.

Sat, 12/22/2012 - 12:35 | Link to Comment Bruce Krasting
Bruce Krasting's picture

A "victory" with TARP? Where did I say that??

There were no victors. Certainly not the banks. It happened. It's over. Hope it never happens again.

Move on. Much more important things to dwell on than 2008.

Sat, 12/22/2012 - 17:56 | Link to Comment 11b40
11b40's picture

Epic fail, Bruce.  Until what happened in 2008 is fixed and the criminals punished, we don't heal.  Period.  Sorry, but we just keep right on sinking.  It may never happen, and we may never recover, but to 'move on' just doesn't cut it anymore than putting a band-aid on gangrene.

Sat, 12/22/2012 - 16:18 | Link to Comment QQQBall
QQQBall's picture

Yeah move on... Focus on the circus - financial represession, crony "capitalism" and ongoing punishment of the prudent, tha tis soooo 2008.... move on to the next distraction.

Sat, 12/22/2012 - 11:45 | Link to Comment 11b40
11b40's picture

Yep......and I have ben here long enough to remember, too.

Fri, 12/21/2012 - 22:33 | Link to Comment Eric L. Prentis
Eric L. Prentis's picture

Just saying. Stay tuned. You heard it here first.

Fri, 12/21/2012 - 17:51 | Link to Comment negative rates
negative rates's picture

There is a fury, just not here!

Fri, 12/21/2012 - 14:54 | Link to Comment DonutBoy
DonutBoy's picture

Seriously?  The most mundane and obvious are issues are left idle because they require a decision to spend less, while unread 2700-page monstrosities are made into law.

If you are planing on Congress getting wise I would have a plan B. 

Meanwhile BK adds a congent look on what the true state of America's unfunded liabilities are regularly.  I don't get fury from his posts - I get knowledge I didn't have before I read them.  I don't get that from many Congressfolk - or from you.

 

Fri, 12/21/2012 - 13:37 | Link to Comment willwork4food
willwork4food's picture

Not too sure about that.

Trichet: Fed, ECB Balance Sheets Are ‘Profoundly Abnormal’

http://www.cnbc.com/id/100333991

 

 

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