Market Drops As GOP Rejects Obama's "Uncompromising" Fiscal Cliff Offer

Tyler Durden's picture




 

Markets sold off earlier today when Boehner commented that "no substantive progress had been made" in the last two weeks, only to recover quite rapidly. The 'rejection' is now in full context as the WSJ has just reported the terms have not changed (or compromised) at all since we first discussed them two weeks ago. A $1.6tn tax increase (upfront), $50 billion economic stimulus, and most importantly (we suspect guided by the miscreant hand of Geithner) the removal of the need for congressional approval to raise the debt ceiling. Overnight futures are down 5-6 points pushing towards Boehner's intraday lows. This should throw a little light on exactly where the negotiations stand (nowhere) and how willing each party is to change and bring hope to the table for compromise (not at all). With DC this far apart still, the game for the next few weeks is not to solve the fiscal cliff but to avoid getting the blame for the cliff-dive.

 

We can't help but feel like this being Geithner's pet project that a) it is doomed, and b) the angle is all about the debt ceiling. He has already publily commented that we would be better off without that 'check and balance' - but of course in reality all that means is that the nation is free to spend at will theoretically (as if there were a limit now). Perhaps it is a subtle signal that (as we have pointed out) the debt ceiling debate is actually even more important than the fiscal cliff and maybe (just maybe) Timmy G has run out of deferred pension tricks up his sleeve to cover the gap.

 

Via WSJ:

President Barack Obama made an opening bid in budget talks with Republicans that calls for a $1.6 trillion tax increase, a $50 billion economic-stimulus program and new power to raise the federal debt limit without congressional approval, a broad set of demands Republicans viewed as a step back in talks to avoid looming tax increases and spending cuts.

 

The proposal, offered by Treasury Secretary Timothy Geithner as he made a round of meetings with congressional leaders in the Capitol Thursday, calls for increasing tax rates on incomes over $250,000, a one-year postponement of looming spending cuts in defense and domestic programs, and some $400 billion in savings over 10 years from Medicare and other entitlement programs.

 

The details of the proposal were described by congressional GOP officials. Earlier in the day, after GOP leaders met with Mr. Geithner, they made plain they didn't like what they heard.

 

"No substantive progress has been made in the talks between the White House and the House over the last two weeks," said House Speaker John Boehner (R., Ohio), who also spoke to Mr. Obama on the telephone Wednesday night.

 

...

 

The White House offer in some sense amounts to a formal start of the negotiations, which could take many twists and turns before any possible deal is consummated. The White House didn't have an immediate comment.

 

...

 

Mr. Boehner's tone was a change from earlier this week when he said he was optimistic a compromise could be reached...

 

"All eyes are on the White House, the country doesn't need a victory lap, it needs leadership," Mr. Boehner said at a news conference in the Capitol. ...

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Thu, 11/29/2012 - 18:52 | 3022143 Samsonov
Samsonov's picture

Please don't think I'm defending Beavis Geithner, but he's just a treasurer, a glorified accountant.  His job is to kiss his boss's butt and keep the books.  He's nobody.

Thu, 11/29/2012 - 19:16 | 3022205 Cathartes Aura
Cathartes Aura's picture

they're all employees, bottom up, top down.

and we all know employees do what they're paid to do, by their boss.

(which is not the popular lie, the tax'd payer)

Thu, 11/29/2012 - 20:18 | 3022352 nmewn
nmewn's picture

He was the head of the New York Fed...who couldn't master Turbo-Tax software...somehow.

He's a fucking tool and everyone knows it.

Thu, 11/29/2012 - 20:23 | 3022363 JohnG
JohnG's picture

Personality disorder?

He's a fucking sociopathic demon.

Thu, 11/29/2012 - 18:48 | 3022125 jldpc
jldpc's picture

Wake Up - Shumer (S:NY)needs 86 billion to repair NY and NJ - he can only get from the House. The tables are about to turn. What a pathetic story this all is.....................

Thu, 11/29/2012 - 18:49 | 3022131 AcidRastaHead
AcidRastaHead's picture

Funny how "Rise Above" looks a lot like "Kicking the Can"

Thu, 11/29/2012 - 18:58 | 3022157 Antifederalist
Antifederalist's picture

CNBC pushing Rise Above is like cigarette companies decrying smoking. What a fucking joke, deck chairs on the Titanic.

Sorry boys, you are all fucked. Too late now. All your paper wealth is about to evaporate. Physical Stuff the only protection

Thu, 11/29/2012 - 18:52 | 3022140 Antifederalist
Antifederalist's picture

No debt ceiling. Yeah, that is the ticket.

The dominos keep falling.

Weimar Amerika.

Thu, 11/29/2012 - 18:57 | 3022154 blunderdog
blunderdog's picture

Doesn't this mean the Dubya temporary tax-cuts go away come Jan 1st?

Both sides must be drooling at the idea...obviously, everyone in Congress WANTS to raise taxes, they just don't want anyone to THINK they want to raise taxes.

How are we going to pay their salaries if we don't start generating some more revenue?

Thu, 11/29/2012 - 18:58 | 3022160 Yen Cross
Yen Cross's picture

 I'm not falling for the 3rd headfake! Risk wants to sell off/ Ill catch the  buy stops getting hit!

Thu, 11/29/2012 - 19:18 | 3022211 chump666
chump666's picture

Yo Yen,

Sell off early December? Or a end month messy closing of books?  Re: Hedge funds holding a sh*t load of USDs hence the DXY not being too bearish. 

Futures just took a hit.

Thu, 11/29/2012 - 19:31 | 3022248 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

We will take a turn down but inflation is massive and no matter what euro bears, dollar kings, and meth addicts say, we won't see a collapse in the stock market again.  The dollar is likely to be the next thing to go (that or another like currency) and even if cash runs from one fiat currency to another the confidence will be lost in the structure of the system.

Fiat will spiral out of control.  What will happen to bonds?  Stocks?  It won't matter when the underlying price is kept in an investment that has lost faith and confidence.

That is still aways out.  Look for 12,700 on the DJ, 1.275 eur/usd to be tested during the next couple weeks.  PMs will likely remian in the channel they are currently trading.

Thu, 11/29/2012 - 18:59 | 3022163 yogibear
yogibear's picture

They will  make  a last minute back room deal to continue talking about the debt.

In the mean time they will raise or remove the debt limit so they can once again be happy and continue to spend like drunken sailors.

Everyone should know the routine by now. The have start worrying about their next re-election campaign  which is much more important to them.

 

Thu, 11/29/2012 - 19:03 | 3022177 fonzannoon
fonzannoon's picture

if they eliminate the checks and balances on the debt ceiling obummer will tell uncle warren to have the US upgraded to AAAA. so it's all good.

Thu, 11/29/2012 - 19:09 | 3022192 Antifederalist
Antifederalist's picture

Uncle Warren wants Dimon for Treas. Sec. that tells you all you need to know about Buffet and Dimon.

When are these criminals going to be prosecuted?

Elliott Spitzer where are you?

Thu, 11/29/2012 - 19:06 | 3022180 mademesmile
mademesmile's picture

I am fed up. Was laid off 2 months back, husband was laid off last month. He actually made the most this past year, about $74K - BUT the take home was $42K. Not all of that is Fed of course, we have FICA, union dues, state, city, county, retirement, FUTA, planned savings, and I think I'm missing a few. There is something wrong when take home pay is 60% of what you would normally earn. I'm applying for food stamps (SNAP) out of spite - with 3 kids the $630 monthly is $230 more than I spend a month and I will turn the extra in to rice, lentils, beans and other long term storage.

It's too hard to escape the system. Unless people stop paying taxes and these crazy "fees", nothing will change. It's impossible for the lowly hourly slave to opt out of getting taxes taken out of the paycheck. This revolution will be up to the business - more jobs for cash or barbarous relics would be a start.

 

Thu, 11/29/2012 - 19:20 | 3022215 yogibear
yogibear's picture

SNAP:

A family may have liquid resources (cash, checking accounts, stocks, bonds, etc.) of up to $2,000. With one or more family members who are disabled or age 60 or over, the resource limit is $3,250.

Benefit Determination

If eligible, the amount of benefits received is determined by household size and adjusted gross income after these deductions:

Pre-Screening Tool

To help determine if you are eligible for SNAP benefits, you can use an online pre-screening tool provided by USDA Food and Nutrition Service.

Thu, 11/29/2012 - 19:30 | 3022242 James-Morrison
James-Morrison's picture

I wonder if liquid includes the gold "lost" in the sunken boat? 

Thu, 11/29/2012 - 20:31 | 3022379 pursueliberty
pursueliberty's picture

If you don't tell them they don't look.  Pretty simple actually.  I have a friend whose wife was having health issues, his contract job was bringing in diddly at the time, and money was running low, and she was on non pay sick leave.

He has a paid for truck worth around $20k, she had a paid for accord worth 15k.  Don't put those down, or the paid for four wheeler, etc.  The workers that hand these out don't give a shit.  You act like it is thier money, they are paid to give away money.

 

Same with USDA home loans and anything else, they don't check the checking accounts you don't put down. 

Thu, 11/29/2012 - 19:06 | 3022183 I am Jobe
I am Jobe's picture

FUCK this shit. The idiots are in charge. It's over.

Thu, 11/29/2012 - 19:09 | 3022187 fuu
fuu's picture

You would be crazy to think this was scripted.

Thu, 11/29/2012 - 19:09 | 3022190 dizzyfingers
dizzyfingers's picture

Taxes up, tax revenue down, January 1, 2013

Collapse by 2014?

Thu, 11/29/2012 - 19:11 | 3022196 Catullus
Catullus's picture

Can we just completely ignore the Republican Party's claims of fiscal conservativism if they approve an unlimited debt ceiling?

Thu, 11/29/2012 - 19:38 | 3022271 Boilermaker
Boilermaker's picture

Only if you're a donkey.  Now, if you're an elephant, then, yes.  Then again, if you live in a blue state probably yes.  However, if you have a zip code in a red state, no.

Or, you could just not give a fuck.

Thu, 11/29/2012 - 19:13 | 3022199 gould's fisker
gould's fisker's picture

They know they can't solve this, much less in a couple of weeks (that's particularly funny, a couple of weeks).  No, they are studying the masterful Euro-putz never ending gangs fab-gabathon on how to perpetuate a rolling fubar'ed bankruptcy cleptocratic mock-legislative (stone dead) body with leadership touting a relatively tiny bitty tax raise as the magix elixir.  Keep it rolling on, raise that debt limit and spread the happiness around.

Thu, 11/29/2012 - 19:19 | 3022218 grunk
grunk's picture

No debt ceiling?

Reid also wanted to tie the debt ceiling in with all this fiscal cliff stuff.

That's a tell.

Now the negotiations can get fun. 

Thu, 11/29/2012 - 19:34 | 3022261 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

It's all one and the same.

Thu, 11/29/2012 - 19:21 | 3022219 grunk
grunk's picture

double entry.

Thu, 11/29/2012 - 19:37 | 3022267 Boilermaker
Boilermaker's picture

Down 4 ES handles!!!!

Here comes the flush!!!

It almost gave back 60% of the GAINS for the day!!!

Thu, 11/29/2012 - 20:26 | 3022371 Garristotle
Garristotle's picture

How about we cut through the all the bullshit and institute a flat rate, no loophole , 25% tax rate.  Wouldn't that effectively lower the middle class rate by about 5%, and raise the rate on the upper class by about 10% and end all of this bickering about fairness in the process? Its not like it will make any difference anyway in the grand scheme of things. 

What do you think, my fellow ZHers?

Thu, 11/29/2012 - 21:41 | 3022515 strangeglove
strangeglove's picture

A picture of a Shit would be more fitting, Huh Tyler's?

Thu, 11/29/2012 - 22:21 | 3022602 cranky-old-geezer
cranky-old-geezer's picture

 

 

I couldn't care less how this "fiscal cliff" thing is going, we know what the outcome will be, lots of senseless debate, debt ceiling raised (or eliminated), small tax increases here and there, and a shitload more spending, same as last time, rinse and repeat.

Fri, 11/30/2012 - 01:00 | 3022841 uncle reggie
uncle reggie's picture

Especially in the current dysfunctional market environment, it amazes me that you ascribe any given market movement to a specific driver such as Obama being "uncompromising" in the bogus cliff "negotiations." C'mon, this type of "analysis" is what one can expect from local tv news muppets. ZH readers are beyond this type of pure speculative bullshit, aren't they? 

Fri, 11/30/2012 - 01:09 | 3022854 Lord Of Finance
Lord Of Finance's picture

Lets see, Boehner says we want to make a deal. Obama says he wants to make a deal. The market rallys on politicians words and promises. A "deal" will be made non-the-less at the last minute. Tax incentives will be going away as part of it. Obama tried last year to end the tax haven status of municiple bonds. Bernank said, after there was some speculation by certain prognosticators that there would be a deluge of municiple bond defaults, that the municiple bond market demand will always be strong because of the large number of conservative investors.

 

How strong will it be if the tax exempt status is removed, which Boehner says is on the table? These fools do not understand that the demand is strong for these bonds only because of the tax haven. Once remove, look out below. I hope these fools do end the tax haven. One way or another this mother is going to go down hard eventually. Ending the tax haven will bring this fiasco to an end and we can finally finish the badly needed reset. Gold will then make it's true inflation adjusted adjustment . . . and then some:) 

Fri, 11/30/2012 - 06:49 | 3023046 overmedicatedun...
overmedicatedundersexed's picture

Jimmy was head of the NY FED for crst's sake, right in the middle of the 08 bail outs..call jim jim what you will, he can spend OPM better than a ex wife of  DonaldTrump. of course he wants no limits to his spending..

for those who see it a compramise for tax incr..remember DHLS took that money and bought the millions of rounds of ammo..TSA used it for more pediophile's to molest your children in public..EPA stopped energy jobs..we need much smaller gov..as in R Pauls vision of no over seas military bases w across the board cuts.

Fri, 11/30/2012 - 06:56 | 3023053 10mm
10mm's picture

More tax,more FEES,more inflation.My creditors will not get paid,oh well.

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