Efficient Op-Ed Hypothesis: "Fiscal Cliff" Soars After Obama Win

Tyler Durden's picture


Whocouldanode? Since August 2011, we have know this painful combination of tax-cut cessations and spending cuts (sequestrations) was due to hit as yet another painful decision 'can' was kicked down the road by the 'super committee'. In February 2012, Bernanke coined the term 'fiscal cliff' for this chaos and since then we have been active in discussing the impact (329 ZeroHedge articles). From pointing out the market's total lack of 'pricing-in' to comprehending the contagion and impact of the 'fiscal cliff' or slope or hill, it would appear the world has been numbed into denial by the monetary policy medicine needed to get an incumbent re-elected. The 'efficient' market is now catching on - as are the 'efficient' headlines as we see searches and news stories surge about this critical event horizon. Between Bloomberg's news story count and Google's search volumes, it would appear the American public is waking up to the reality about to beset them now that re-hope is back.

Bloomberg's news story count...

Via Bloomberg

and Google Trends...


For ZeroHedge alone, there has been 329 articles mentioning the term "fiscal cliff"...

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Mon, 11/12/2012 - 09:41 | 2972091 GetZeeGold
GetZeeGold's picture



Thelma & Louise......punch the gas.

Mon, 11/12/2012 - 09:42 | 2972103 Crisismode
Crisismode's picture

That chart looks like the fiscal cliff upside down.

But there doesn't seem to be that Wile E. Coyote moment of pause before the plunge.


Mon, 11/12/2012 - 10:07 | 2972176 cossack55
cossack55's picture

Isn't the word "cliff" actually ancient Mayan speak for "reality"?

Mon, 11/12/2012 - 10:10 | 2972183 Popo
Popo's picture

I think it's Washington-speak for "Not a problem for us spend-happy assholes on either side of the aisle."

Mon, 11/12/2012 - 10:49 | 2972306 Urban Roman
Urban Roman's picture

Zero will simply address Congress and say:

"You didn't build that cliff."

And poof, it will go away.

Mon, 11/12/2012 - 12:05 | 2972609 slackrabbit
slackrabbit's picture

Actually, its the ONLY thing they did build!




Mon, 11/12/2012 - 12:42 | 2972794 TruthInSunshine
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Paul "Summon Ancient Aliens" Krugman, the economist whom even Keynes would have obtained a restraint + cease & desist order + slander & libel damages award against, is baaaaaack, bitchez.

Yes, the very same Paul Krugman who argued, right up to 3 weeks prior to the election, that the U.S. was actually in a de facto economic depression (he even hawks his book, "End This Depression Now!," to this very day), but then quickly changed his talking points to how "fairly well" the economy was rebounding once he saw that Romney had a chance of beating the bailouter-in-chief, bitchez, and the same Krugman who many would at least respect more (at least for being straightforward and honest rather than intentionally obtuse and indirect) if he just came out and stated he wishes upon a star for Mexican living standards brought about by a 75% debasement of the remaining purchasing power of the USD over the next 5 years:


Squirming Hawks: by Paul "Release The Kraken" Krugman
Mon, 11/12/2012 - 16:25 | 2973794 archon
archon's picture

The fiscal cliff is nothing more than an opportunity for the "never let a good crisis go to waste" crowd, who see it as one small step for markets, one giant leap for totalitarianism in America...

Mon, 11/12/2012 - 09:46 | 2972126 rocker
rocker's picture

You know, don't ya. That there is this short fat guy who has a book. "Words that matter".  In his used phrases.

We have, Job Creators, Death Tax, Flip Flopper, Terrorist, and Bernanke's gift to him, Fiscal Cliff.  Punch the Gas, Hmmmmm.   

Mon, 11/12/2012 - 10:25 | 2972236 smlbizman
smlbizman's picture

update......at this time the following items are causing an unusual demand for vomit clean up in aisle 6.....xmas music and displays in august , the "fiscal cliff" and now the combo platter of ...(drum roll)...."rise above" the "fiscal cliff"....i think it is quite clear now that we are being prepared for getting it so big and hard up the ass that a log splitter may be more pleasent......

Mon, 11/12/2012 - 10:00 | 2972162 slaughterer
slaughterer's picture

A Thelma and Louise drive over the fiscal cliff will not happen.  The Wile E. Coyote moment will not happen.  There are too many painful consequences for GOP constituencies (AMT is just one) for the Repubs to adopt a hard stance.  Actually, th two parties are probably closer to a reasonable compromise than ever.  A temporary plan that addresses the problem partially and buys time will be announced before EOY.   Do not leave public policy outcome prognostication up to Google Trends or the MSM, which will exagerate and distort for ratings build, and has little domain competence or success in this area.

Mon, 11/12/2012 - 10:06 | 2972174 ArkansasAngie
ArkansasAngie's picture

Long live the status quo.  The time is not yet.

I'm thinking 18 months before the debt printing starts getting hairy -- Trillions are hard to keep buried even if they are just 1's and 0's.

Taxes will be going up.  I suspect in addition to their current inflation tax you'll see a closing of loopholes for little people.  1%'ers are in control for now.

Mon, 11/12/2012 - 10:18 | 2972192 LawsofPhysics
LawsofPhysics's picture

" Trillions are hard to keep buried even if they are just 1's and 0's."


I think that depends on how much garbage you have on your balance sheet.  Look at the MBS and derivative contracts that are on the books.  Seems to me there is a lot of garbage to "dissappear".

Know your history, the 0.1 %er's are always in control until the supply lines break and the paper promises all die, same as it ever was.  Think about what is left behind, physical assets, and the 0.1 % are always holding these, so so should you.  We became a rentier society long ago, who will be paying yours when you get old?  Don't be left holding paper promises because they will all be worthless.

Mon, 11/12/2012 - 11:08 | 2972366 ParkAveFlasher
ParkAveFlasher's picture

"Reasonable compromise" = "Print"

meep meep

Mon, 11/12/2012 - 12:21 | 2972703 Big Slick
Big Slick's picture

" Trillions are hard to keep buried even if they are just 1's and 0's."

While I agree the time is PROBABLY not yet, it's a funny thing about exponential functions: even with very little time to go, things can seem quite sustainable.

Mon, 11/12/2012 - 10:10 | 2972182 andrewp111
andrewp111's picture

There will be a drive off the cliff, because that is what Obama wants to happen. Boehner too!

Mon, 11/12/2012 - 10:11 | 2972186 Dr. Engali
Dr. Engali's picture

Obama will let this thing drive off the cliff. He will present the illusion of compromise ,but they won't. The illusion will allow him to blame it on the republicans when it happens. If we go off the cliff he gets everything he wants..higher taxes....less military spending.  There will be no agreement.. there are already demacrats calling for Obama to do nothing about the cliff.

Mon, 11/12/2012 - 10:18 | 2972215 fonzannoon
fonzannoon's picture

It's possible. As long as they are confident that everyone will run towards the treasury market and not away from it there is a good possibility they let it happen.

I think it is easier to keep the markets at ease and what's left of the ignorant middle class with their heads buried deep in the sand, but it's possible they drive right off.

Mon, 11/12/2012 - 10:27 | 2972250 Dr. Engali
Dr. Engali's picture

The way I see it Obama has the upper hand.He has nothing to lose and the 2014 elections the republicans have too many seats to defend. Even if American goes witha throw the bums out attitude the democrats win just because of the number of seats they need to defend versus what the republicans need to defend.

Mon, 11/12/2012 - 10:34 | 2972267 fonzannoon
fonzannoon's picture

The only fly in the ointment I see with that is it destructs the whole wealth effect that the Bernak has been trying to keep propped up. We go off that cliff and housing goes right in the tank. Throw in a massive market correction to boot. You are probably right that that Obama could possibly shift the blame and people may go along with it. I guess since I have totally checed out since the election I may be underestimating that aspect. I just think Bernake is telling Obama "see this whole printy thing works! Lets paper over everything!" and Obama is late for dinner with Clooney and just says "whatever".


Mon, 11/12/2012 - 12:02 | 2972586 viahj
viahj's picture

equity and housing bust = sheep running to gov't for protection/relief/free shit/etc

Mon, 11/12/2012 - 10:48 | 2972303 SeattleBruce
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"the republicans have too many seats to defend."

What about 55-45 Ds in the Senate - and 1 D in the WH in 2016 - seems to me both parties have lots to lose from that standpoint...

Mon, 11/12/2012 - 10:45 | 2972288 nodhannum
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@fonz said "As long as they are confident that everyone will run towards the treasury market and not away from it"...in the long run (which may not be so long) it doesn't matter. The dems will come for all your 401Ks to save the world.  If your Plan B is not executed soon, and I do mean soon, you get all the ass-raping you did or did not vote for.

Mon, 11/12/2012 - 12:38 | 2972776 odatruf
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The only player in the treasury market that matters is the Fed. They conjure up 1s and 0s and use them to 'buy' government debt instruments (and prop up mortgage securities, too) at a rate (and with the capacity) that makes it moot whether any sovereign funds, institutions or retail 'investors' are interested in buying at any time other than when they are front running (buying low - selling high to the wizard of Marriner Eccles).

The Fed doesn't even need to be buying that much or any at all, really. They just need for everyone to believe that they can and will come in and buy it all if needed.

I am interested in reading anyone's thoughts about where the limit is to such buying. If at the next auction, not enough debt was being bought to finance the government, the Fed would certainly step in. If they had to participate and buy 25% would it matter? How about 50% or even 75%?  If that didn't have consequences, why not buy 100%? Or, why not have the Fed pay an actual negative interest rate? Those 1s and 0s aren't hard to add, after all.

I'd love to believe that somehow it would matter, but at this point I honestly don't think it would besides adding to the amorphous inflation that we will never see officially represented anywhere.

Mon, 11/12/2012 - 10:58 | 2972323 earnyermoney
earnyermoney's picture

Exactly. Democrats got to raise taxes and gut the military. Let them deal with the layoffs. Republicans get acroos the board spending cuts. Keep in mind those are not cuts but just slowing down the rate of growth. The debt ceiling is where the Republicans should refuse to compromise. Rewrite the tax code in exchange for a hike or get used to cutting your budget to stay under the ceiling.

Mon, 11/12/2012 - 12:50 | 2972839 odatruf
odatruf's picture

Since for once, inertia is working for us, I wish the GOP would keep that line in the sand. But, there are not enough Tea Party members to make it happen or enough votes within the majority to punish Leadership for their failure. All that will be needed is a few dozen establishment Republican House members to join with the Democrats to pass either a sell-out grand bargain or a debt ceiling increase without meaningful conditions.

Since that is such a low barrier, it will happen and it will be kabuki of the highest order.

Prediction: after much hand wringing and enough dithering to make Hamlet blush, 50 to 75 GOPers will be allowed to vote against the deal as will 120 or so Dems, leaving the compromisers to pass it.

The Senate will either rewrite the rules to disallow the filibuster or will pass the deal as a budget reconciliation, so that there won't be any blocking it.

Mon, 11/12/2012 - 10:13 | 2972196 insanelysane
insanelysane's picture

Methinks you are incorrect.  AMT doesn't matter as the Dems plan to not only put the "wealthy" back to the rates prior to Bush but to raise them from there.  That is the pay a little more part, not the expiration of the tax cut but an additional tax hike.  So the "do nothing alternative" for the repubs just puts the taxes back to pre-Bush where as "compromise" would result in AMT version 2 and more.

Strap on a parachute kids, we're heading off the cliff.  And when I say "strap on a parachute", I really mean buy metals that aren't tungsten.

Mon, 11/12/2012 - 12:42 | 2972797 Diogenes
Diogenes's picture

"A Thelma and Louise drive over the fiscal cliff will not happen.  The Wile E. Coyote moment will not happen.  There are too many painful consequences for GOP constituencies (AMT is just one) for the Repubs to adopt a hard stance.  Actually, th two parties are probably closer to a reasonable compromise than ever.  A temporary plan that addresses the problem partially and buys time will be announced before EOY.   Do not leave public policy outcome prognostication up to Google Trends or the MSM, which will exagerate and distort for ratings build, and has little domain competence or success in this area."

He thinks politicians can prevent the inevitable. Isn't that cute?


Mon, 11/12/2012 - 09:41 | 2972098 LawsofPhysics
LawsofPhysics's picture

Gold, silver, lead, and brass.  To quote another ZH member; "One group insures the security of the other".  Lots of naked emperors walking around lately.

Mon, 11/12/2012 - 10:18 | 2972208 francis_sawyer
francis_sawyer's picture

All I have left is feldspar...

Mon, 11/12/2012 - 09:41 | 2972099 falak pema
falak pema's picture

jesus, Obama is giving the fiscal cliff researchers a hard-on! 

Mon, 11/12/2012 - 09:51 | 2972134 GetZeeGold
GetZeeGold's picture



Time to eat your peas amigo.

Mon, 11/12/2012 - 09:55 | 2972151 falak pema
falak pema's picture

popeye eats spinach!

Mon, 11/12/2012 - 10:00 | 2972163 GetZeeGold
GetZeeGold's picture



I hope he doesn't show up then cause we don't have any of that crap....just peas.

Mon, 11/12/2012 - 09:42 | 2972102 Neethgie
Neethgie's picture

Remarkably similar to america's projected debt graph..

Mon, 11/12/2012 - 09:42 | 2972105 pods
pods's picture

I'd like to push the Bernank off a fiscal cliff.  Or is that a physical cliff?


Mon, 11/12/2012 - 09:47 | 2972125 dwdollar
dwdollar's picture

I'd like to run him through his money printing machines.

Mon, 11/12/2012 - 10:26 | 2972244 JPM Hater001
JPM Hater001's picture

I think there is an Illuminati ritual for that...

Mon, 11/12/2012 - 10:43 | 2972286 DarkestPhoenix
DarkestPhoenix's picture

Too quick, DWD.

Mon, 11/12/2012 - 10:12 | 2972191 Zero Debt
Zero Debt's picture

Pernanke Put Pitches...

Mon, 11/12/2012 - 10:21 | 2972230 insanelysane
insanelysane's picture

Bernank doesn't believe in physical anything.

Mon, 11/12/2012 - 12:13 | 2972653 slackrabbit
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Mon, 11/12/2012 - 09:43 | 2972106 bigbwana
bigbwana's picture

Fiscal cliff engineered by the Illuminati, in their evil quest for a NWO. They have been crushed by the Galactic Federation (Google). Spread the wondrous news!

Mon, 11/12/2012 - 09:44 | 2972109 Water Is Wet
Water Is Wet's picture

The "fiscal cliff" is another way for politicians to force themselves into the spotlight, just like last year's debt ceiling increase.  Yawn.

Mon, 11/12/2012 - 09:44 | 2972111 justanothersucker
justanothersucker's picture

Tyler Durden = Carnac The Magnificent!  All of these mentions of the FC and STILL they will allow it to happen. That's why Romney threw the election, so that the blame would fall on the Demrepubs....I meand the Republicrats....I mean those other guys!

Mon, 11/12/2012 - 09:44 | 2972113 fonzannoon
fonzannoon's picture

This is just another straw man to be knocked down Mario Draghi style. Some big announcement will come out soon that an agreement has been reached in principle. It's another last ditch attempt to pump the market up. Once the details of it fail to come together the media will declare that they are sick of talking about it and some other straw man will be set up.

Mon, 11/12/2012 - 10:16 | 2972199 Spastica Rex
Spastica Rex's picture

The con goes on.

Mon, 11/12/2012 - 11:02 | 2972342 SeattleBruce
SeattleBruce's picture

"Some big announcement" - that is how they market it, isn't it?  What a farce...

Mon, 11/12/2012 - 09:50 | 2972115 GraveyardSpiral
GraveyardSpiral's picture

Late-model, pre-packaged parachute for sale. Never been used. Asking for 25oz Au / Monster Box of Ag OBO

Mon, 11/12/2012 - 09:45 | 2972119 ALANBEEKMAN

"Give me warp drive, Scotty!"

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