A Fiscal Flowchart For Dummies: Here Is What Happens Next

Tyler Durden's picture

Confused by what is about to take place amid the loud noise, political posturing and rhetoric that as soon as tomorrow will hit an unseen before level as Obama's plan to split the GOP has worked so well it has completely backfired and thrown any game theoretical forecasts out of the window? Here is Goldman's fiscal flowchart, which is not for faint of heart, as ever more signs point to the box with the all caps "recession" written all over it.


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Cursive's picture

This was so obvious from the start.  I guess the market makers were just protecting their contracts through opex or it was an HFT momo thing or maybe a combo of both.  Whatever it was, the market is now fully exposed as a farce and the worst discounting mechanism on earth.  Are you listening Jim Crapper?  Joe Weasel?

gould's fisker's picture

I know not much quarter is given to anyone on ZH, especially the present day "market makers", but--It's kinda hard to read a party's members who would throw all of their leverage out the window with the plan b type meltdown, and then turnaround and leave town, and to cap it all off tell their despised adversaries to put a deal together that everyone knows they won't support.  No matter that the House Repubs say that they will come back after xmas, they've left their party and the government is disarray, the markets should be freaked out by the blunt trauma psy-ops of it all, and they're going to have a collective headache back in their home districts when they realize the collective self inflicted enema that they injected into themselves tonight--this is not in support of either party, stopped believing in any of them a long time ago.  Just sayin' . . .

kliguy38's picture

perhaps your attention should be focused on who the republican party takes its marching orders from....its the same banking cabal that gives the dems their marching orders. Don't get caught up analyzing the "decision making" process....these decisions are all orchestrated and planned You just need to know the objectives.

gould's fisker's picture

I was just looking at it from a "self interest" point of view--when human beings don't act on self interest they're either nuts or hard to figure out--in this case i was giving them the benefit of the doubt by going with the latter.

kliguy38's picture

Yes, but you have to understand their self interest and it is to the true power that is their puppetmasters. Watch what the ultimate decision is and in what manner it ultimately is made. Its only a show....the decision has been made a long time ago....this is only a dog and pony show for the peeps. 

Careless Whisper's picture

The GS flowchart forgot the part about "Sell AAPL prior to Dec 31 to lock in lower capital gains rate". 


tango's picture

By self interest voting, I presume you are referring to Obama's supporters - blacks, Latinos, single women - who did worse under him than any president in history then turned around and supported him overwhelmingly.  I don't quite understant the self interest portion of this.

jmk's picture

Total unadulterated horseshit!! You're talking absolute rot! Another conspiracy that seem to proliferate on the Internet. You, Sir, talk like a man with a paper ass who could not produce a particle of fact to support your idiotic comment.

blunderdog's picture

Indeed.  It is totally impossible to imagine that either party could maintain any kind of strategy or secrecy.

chubbar's picture

I'd be willing to go along with that thought except I see an unusual level of bipartisanship, lack of debate and dead of the night deals over shit like NDAA, FISA extension, Fed Charter extension (ends the 31st), etc, ad infinitum. In other words they fight out in the open like cats and dogs over bullshit issues and behind the doors they hold hands and vote in one liberty restriction after another.

One World Mafia's picture

Oh come on, big money backs and bribes both, the same big money that owns The Fed.

Jake88's picture

when you have to say, "just sayin" you probably shouldn't say.

The trend is your friend's picture

Goldman's 1250 spx target may still have a shot. anything can happen in 6 trading days.  That's only 20 points a day

ball-and-chain's picture

Good citizens of Metropolis!

Nothing is going to happen next.

I repeat...Nothing is going to happen.

Please go back to bed.

There is nothing to see.


AldoHux_IV's picture

Someone should tell these sanctimonious assholes that we've been in a recession and to stop taking over central banks.  Fiscal cliff or not, the world has reached its "Madoff point of no return"

CrashisOptimistic's picture

You know, I don't know what these people doing these calculations are thinking, but if no action is taken at all, it's a $600 billion drag on GDP.

600B / 15.3T = 3.9% GDP drag   Current measures for Q4 say we'll be sub 2% for Q4 2012 going into Q1 2013 so that looks a lot like a -1.9% recession.

If they compromise and "get a deal" and cut that event in 1/2, they cut 300Billion (reduce deficit $300B) which is 1.95% GDP.  THAT'S PROBABLY ALSO A RECESSION.

These guys who are saying all we need is a deal and all is well are not looking at the numbers.  What they really want is a deal that cuts no spending and raises no taxes, adds another trillion to debt and dodges GDP headwind.


Have a look at this write up of ANNUAL GDP growth rates:



The Gross Domestic Product (GDP) in the United States expanded 2.60 percent in the third quarter of 2012 over the same quarter of the previous year.


Thats for folks that think the $600B only applies to Q1.

Cursive's picture



These guys who are saying all we need is a deal and all is well are not looking at the numbers.  What they really want is a deal that cuts no spending and raises no taxes, adds another trillion to debt and dodges GDP headwind.


Amen, brother.  Deal or no deal, the pain is already baked in and it's time to face the music.


Nobody For President's picture

Amen to your amen. Ain't it a bitch to understand basic math?

Apparently not a requirement for running for Congress.

trav777's picture

well, there's never a bad time to take political opportunity of this...the 47%ers cannot do basic math and WILL believe that reality is somehow cheating them.

Panafrican Funktron Robot's picture

Even if nothing else is done, the knock-on effects of the payroll tax cut expiry and the end of extended unemployment alone will almost certainly = recession.  There are a lot of leveraged bets riding on consumer spending, so less money in the wallets of the plebs can have relatively outsized effects on economic growth.  

jim249's picture

We are already in recession now. Have been for months.

RunningMan's picture

Have been for YEARS. Fixed it.

Clowns on Acid's picture

Well to lil ole me...that tells me SELL the ES, but methinks to Federal BenDover it says BUY.



rhinoblitzing's picture

What Cliff? With $85 Billion a month propping up all the markets and Swap lines into ECB primed and flowing, What Cliff?

Deal - No Deal, WTF? 

What Cliff? $85 Billion... $85 Billion... $85 Billion... Every Month...

Happy Ho Ho's, Ding Dong's, and Twinkies - Bitchez!

CrashisOptimistic's picture

That doesn't work.  It could be $585 Billion and all it would be is cash given to Primary Dealers for bonds.  That money doesn't go anywhere.

It doesn't replace tax pulled from paychecks for Soc Sec contribution.  It doesn't replace money paid to contractors providing services to gov't.

blunderdog's picture

It helps maintain nominal revenues (GDP) and dilutes existing debt.  In general, 150 million 'Merkins can still afford to pay a lot more for food, electricity, gas, and/or housing.

knicks3005's picture

So this is the Change that Obama was talking about or the great change the Mayans talked about? I'm confused.

Manthong's picture

Well, an economic policy of financial domination that rips the heart out of the middle class and the prospects for the kids is a “fundamental transformation” for the US that is in line with  Mayan tradition.


Frozen IcQb's picture

Oh What fun it is to ride in a floorless open sleigh!

ArsoN's picture


OptionNinjaNYC's picture

2 Unicorns, 3 Black-Swans, 6 Bottles of Snake Oil, 4 Tooth Faries....uumm, am I forgetting something??

LetThemEatRand's picture

5 ... golden ... rings....

4 fiscal cliffs

3 Boehner tears

2 bail outs

and a Choomwagon Q Easing.

Yen Cross's picture

 Have a good Holiday Season, LetThemEatRand.   We miss time zones and topics, but just wanted to say hello, and hope you're feeling well. ;-)

LetThemEatRand's picture

Thanks, Yen Cross -- happy holidays!  

Yen Cross's picture

  That was pretty kool Tyler. Thanks. I'm not a Legislative Thespian/ 

NoDebt's picture

Cue the 1937 music.  Or the end of "A Perfect Storm" when they saw glimmers of daylight and thought they might just make it out alive.

Glad I've been out for a month.  Don't mind missing the false-hope run-up the last few weeks at all.

That being said, we'll probably be up by the end of tomorrow's session, just to rub salt in my wounds.

Yen Cross's picture

 Buy SILVER in large quantities/

worbsid's picture

He said, "May you live in interesting times."  And wouldn't you know it ... yep, interesting times and only about 7 hours till Winter Solstice.

sitenine's picture

Let's be real clear about something here. These clowns are just arguing over how to implement austerity, not IF, but HOW. What kind of idiots are we that we can sit back and actually argue that a 'deal' of any kind avoids the fact that your taxes are going up and that 'services' are going to be cut back. We knew this was coming, so let's not kid ourselves about that either.

What? The U.S. isn't Europe? You don't say...

Just get used to it, and start calling it what it is.


zhandax's picture

What are these 'services' of which you speak?  No one has mentioned a reduction in airport gropes and I seriously doubt the IRS has any layoffs on the table.  Cut it all out and I would call it improvement, but I don't see any 'services'

blunderdog's picture

They mail checks.  That's what the mighty FEDGOV does. 

It mails checks.

zhandax's picture

They are not mailing me one, so it l still don't see any 'services'.  Guess I still have to wait 10 days to further alienate my congressdouches?

tango's picture

If you think Senate Democrats are arguing over how to implement austerity then you are definitely living in an alternate universe.  I have seen almost no comments from even the GOP on the real problem (exponential rise in social spending) out of fear but the Dems are quite clear:   They want no cuts to social programs, period.   I'm not sure how that translates into austerity in any language.

Panafrican Funktron Robot's picture

"They want no cuts to social programs, period."

And Republicans want no tax increases, period.  Ergo, we "go over the cliff", period.  And get both tax increases and spending cuts.  Period.

ugmug's picture

As everyone starts to crap their pants watching the world's financial markets crumble the resultant sewage flow will slide everyone towards the fiscal cliff......and over it.

Of course Nancy Pelosi's rubbery face will arrest her fall and propel her back upwards several times over.



q99x2's picture

Nah they just make the GDP larger before subtracting like they did this time. No Problem.

dunce's picture

An opinion from goldman i can believe, but as usual they will find a way to profitn even from a recession. Are they evil or just souless?

StoleYourMoney's picture

Going over the cliff will make the current recession visible, finally.