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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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Thu, 12/20/2012 - 23:43 | 3085494 Cursive
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?

Thu, 12/20/2012 - 23:54 | 3085527 gould's fisker
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' . . .

Thu, 12/20/2012 - 23:58 | 3085540 kliguy38
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.

Fri, 12/21/2012 - 00:00 | 3085548 gould's fisker
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.

Fri, 12/21/2012 - 00:07 | 3085567 kliguy38
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. 

Fri, 12/21/2012 - 00:15 | 3085597 Careless Whisper
Careless Whisper's picture

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


Fri, 12/21/2012 - 09:40 | 3086352 tango
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.

Fri, 12/21/2012 - 02:08 | 3085902 jmk
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.

Fri, 12/21/2012 - 02:29 | 3085946 blunderdog
blunderdog's picture

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

Fri, 12/21/2012 - 09:43 | 3086360 chubbar
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.

Fri, 12/21/2012 - 04:02 | 3086012 One World Mafia
One World Mafia's picture

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

Fri, 12/21/2012 - 10:20 | 3086481 Grinder74
Grinder74's picture

No, it's the Sith.

Fri, 12/21/2012 - 11:16 | 3086695 Jake88
Jake88's picture

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

Fri, 12/21/2012 - 00:02 | 3085553 The trend is yo...
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

Fri, 12/21/2012 - 00:15 | 3085595 ball-and-chain
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.

Thu, 12/20/2012 - 23:44 | 3085496 AldoHux_IV
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"

Thu, 12/20/2012 - 23:59 | 3085500 CrashisOptimistic
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.

Fri, 12/21/2012 - 01:02 | 3085797 Cursive
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.


Fri, 12/21/2012 - 03:37 | 3085990 Nobody For President
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.

Fri, 12/21/2012 - 09:29 | 3086308 trav777
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.

Fri, 12/21/2012 - 11:49 | 3086891 Panafrican Funk...
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.  

Thu, 12/20/2012 - 23:48 | 3085505 jim249
jim249's picture

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

Fri, 12/21/2012 - 08:50 | 3086220 RunningMan
RunningMan's picture

Have been for YEARS. Fixed it.

Thu, 12/20/2012 - 23:48 | 3085507 Clowns on Acid
Clowns on Acid's picture

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



Thu, 12/20/2012 - 23:49 | 3085508 rhinoblitzing
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!

Fri, 12/21/2012 - 00:01 | 3085554 CrashisOptimistic
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.

Fri, 12/21/2012 - 02:33 | 3085951 blunderdog
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.

Thu, 12/20/2012 - 23:49 | 3085510 knicks3005
knicks3005's picture

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

Fri, 12/21/2012 - 00:33 | 3085707 Manthong
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.

Thu, 12/20/2012 - 23:50 | 3085513 Frozen IcQb
Frozen IcQb's picture

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

Fri, 12/21/2012 - 00:02 | 3085555 ArsoN
ArsoN's picture


Fri, 12/21/2012 - 00:03 | 3085559 OptionNinjaNYC
OptionNinjaNYC's picture

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

Fri, 12/21/2012 - 00:06 | 3085565 LetThemEatRand
LetThemEatRand's picture

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

4 fiscal cliffs

3 Boehner tears

2 bail outs

and a Choomwagon Q Easing.

Fri, 12/21/2012 - 00:14 | 3085588 Yen Cross
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. ;-)

Fri, 12/21/2012 - 00:18 | 3085633 LetThemEatRand
LetThemEatRand's picture

Thanks, Yen Cross -- happy holidays!  

Fri, 12/21/2012 - 00:05 | 3085563 Yen Cross
Yen Cross's picture

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

Fri, 12/21/2012 - 00:09 | 3085574 NoDebt
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.

Fri, 12/21/2012 - 02:13 | 3085910 Yen Cross
Yen Cross's picture

 Buy SILVER in large quantities/

Fri, 12/21/2012 - 00:14 | 3085582 worbsid
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.

Fri, 12/21/2012 - 00:19 | 3085634 sitenine
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.


Fri, 12/21/2012 - 02:17 | 3085921 zhandax
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'

Fri, 12/21/2012 - 02:35 | 3085954 blunderdog
blunderdog's picture

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

It mails checks.

Fri, 12/21/2012 - 07:00 | 3086074 zhandax
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?

Fri, 12/21/2012 - 09:46 | 3086367 tango
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.

Fri, 12/21/2012 - 11:53 | 3086915 Panafrican Funk...
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.

Fri, 12/21/2012 - 00:26 | 3085673 ugmug
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.



Fri, 12/21/2012 - 00:54 | 3085779 q99x2
q99x2's picture

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

Fri, 12/21/2012 - 01:15 | 3085815 dunce
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?

Fri, 12/21/2012 - 08:30 | 3086188 MillionDollarBoner_
MillionDollarBoner_'s picture


Fri, 12/21/2012 - 01:42 | 3085853 StoleYourMoney
StoleYourMoney's picture

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

Fri, 12/21/2012 - 01:59 | 3085886 TimmyM
TimmyM's picture

Oh big whoopty woo, the boogie man recession. Finally we will get the creative destruction we so sorely need to allocate resources to a productive use.
Please don't promote this bullshit confusion of GDP with quality of life.

Fri, 12/21/2012 - 02:35 | 3085956 Rick Masters
Rick Masters's picture

creative destruction, ay? isn't that an oxymoron. I'm positive it is. What exactly does destruction create? Yeah we can create something new after destruction more easily since there it wouldn't be as hard because of the nature of loss and gain but how about we create something from something instead of making millions suffer to achieve whatever utopia it is you hope to create, which is probably some nightmare society. Know who else wanted this type of thing: Lenin, Hitler, Franco, Pinochete (spelling) not saying you wont killing like that but all the same you seem happy people will suffer.

Fri, 12/21/2012 - 02:52 | 3085968 Element
Element's picture

Rick, you think USSA is going to go into a possibly deep protracted recession, without pulling down China first, or at least at the same time?

That's what all this propping crap is about ... trade war and geopolitical outcomes.

You've got your food stamps, right? ... you're going to need 'em.

BTW, hope your business things got sorted mate, have a good week.

Fri, 12/21/2012 - 09:31 | 3086314 trav777
trav777's picture

the fucking WORLD is going into recession.

Barely a few of the nitwits on this site have come to grips yet with the fact that it's OVER.  GROWTH IS OVER.

There isn't the oil supply growth to propel it.

Fri, 12/21/2012 - 09:50 | 3086378 tango
tango's picture

No, but alternatives are rapidly coming on board in all areas = solar, nuclear, wind, bio, nano, geo, artifical photosynthesis, etc.   It's ironic that just as we recognize resources are limited we collapse because we fail to see that the same is true of debt.

Fri, 12/21/2012 - 06:24 | 3086105 Captain Kink
Captain Kink's picture

 you seem happy people will suffer.

Not happy.  Just recognizing that life is not all unicorns and marmelade...malinvestment needs to be purged for efficient improvement in productive capacity.  this is what ultimately raises living standards. Central Planning, Debt fueled growth, Bailouts, and Redistribution are not now--nor have they ever been--the right policies.

Fri, 12/21/2012 - 07:05 | 3086116 zhandax
zhandax's picture

Hate to tell you skip, but that is the way malinvestment is corrected.  By widespread suffering.  That's why it is such a bad concept as economic policy.

Fri, 12/21/2012 - 02:00 | 3085889 dark pools of soros
dark pools of soros's picture


Fri, 12/21/2012 - 11:21 | 3086716 Jake88
Jake88's picture


Fri, 12/21/2012 - 02:16 | 3085919 Amused2Death
Amused2Death's picture

It's all for show, Boehner tried to pull a stunt to satisfy the base and it backfired in his face, but that doesn't mean anything.  There will be an agreement before year's end to avert the "cliff", they'll kick the can down the road to the next congress, and the markets will rally, mark my words!

Fri, 12/21/2012 - 02:25 | 3085937 Lord Of Finance
Lord Of Finance's picture

this has all the suspense of a shakspearean tragedy. Soon to have the outcome of a greek tragedy. Just let us know when the mayan soccerball makes through the wormhole.

Fri, 12/21/2012 - 08:22 | 3086177 forwardho
forwardho's picture

Thats not a soccerball, it's your head. what a tragedy

Fri, 12/21/2012 - 02:26 | 3085938 blunderdog
blunderdog's picture

OMGZ!  NOES!  Alas, alack, and woes is us!

A recession?!?!

Fri, 12/21/2012 - 02:56 | 3085952 Element
Element's picture



Can't they just increase the debt-ceiling past the next election?

Everyone was happy to do that last time.

Don't they just have to say, "yes"?


Fri, 12/21/2012 - 03:11 | 3085976 Yen Cross
Yen Cross's picture

We're building a Death Star to mine crude 1300 light years away! 

Fri, 12/21/2012 - 05:57 | 3086094 Element
Element's picture

What sorta mile/gal you get with the new d/star?  Does it have a cup holder?

Fri, 12/21/2012 - 03:43 | 3085992 magpie
magpie's picture

It's all about the narrative

"We had this booming recovery, but those evil GOPer and an inept Congress decided to sabotage Dear Leader's brilliant plan and the economy. Time for executive action to end the vestiges of parliamentary democracy."

Fri, 12/21/2012 - 12:10 | 3087008 De minimus
De minimus's picture

SHUT UP!  Damned bird....  Letting the plan out of the bag like that.

Fri, 12/21/2012 - 05:49 | 3086091 Wile-E-Coyote
Wile-E-Coyote's picture

Just increase the debt ceiling to a nice round figure say $100trillion.. oh here comes the nurse with my meds, can I have my gun back now please?

Fri, 12/21/2012 - 06:30 | 3086107 ThankYouSirMayI...
ThankYouSirMayIHaveAnother's picture

So this was what the Mayans were talking about!

 Bring on the Cliff

Fri, 12/21/2012 - 07:53 | 3086150 Acet
Acet's picture

Just  jump from the cliff - the water is great down here.

Fri, 12/21/2012 - 09:34 | 3086326 ZeroAvatar
ZeroAvatar's picture

Not me.......I never drink and dive.

Fri, 12/21/2012 - 08:04 | 3086160 new game
new game's picture

not understanding the cliff;brainwashing via play of words...

large cuts to military-exactly what the fuck is the problem?

raising taxes on the wealthy-give me a tax break/loophole up the ass bentover LOL smile as I hire a tax attorney to AVOID taxes.

fucking joke is all i can say-expecting the losers that got us here to solve the problem?????

we are over the mental cliff! free fall of common sense. corruption rules til chaos ensues...

Fri, 12/21/2012 - 09:44 | 3086363 redeals
redeals's picture

With great change comes opportunity.

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