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The One Thing Everyone Is Forgetting About The Fiscal Cliff

Tyler Durden's picture




 

While everyone is hypnotized by the melodramatic theater in D.C., it is worth reminding readers just what the one most important statement so far uttered by anyone on the topic of the Fiscal cliff is. That statement belongs to Chairman Bernanke, it was uttered during the December 12 Fed press conference when QE4EVA was announced, and is his response to Peter Cook from Bloomberg TV who asked "if the policy makers were not to agree to some sort of deficit deal by the end of this year and we were to go over the fiscal cliff, that the size of these asset purchases could indeed grow in response to that?' Bernanke's response: "if the economy actually went off the fiscal cliff, our assessment, the CBO’s assessment, outside forecasters, all think that that would have very significant adverse effects on the economy and on the unemployment rate. And so, on the margin, we would try to do what we could. We would perhaps increase a bit." And there you have it, and there goes any sense of urgency, at least until the real deadline in late March, when the Treasury will have tapped out the G-fund and can't extend the debt ceiling any more.

"Get to work, Mr. Chairman."

 

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Fri, 12/21/2012 - 19:20 | 3088685 rahbii
rahbii's picture

Fiscal Cover

Fri, 12/21/2012 - 19:50 | 3088785 vast-dom
vast-dom's picture

Tyler: I assure you no one is forgetting that which springs eternal in Ponzi markets. Any deviation from central plan will be bolstered by printing. Please.

Fri, 12/21/2012 - 20:52 | 3088909 Sudden Debt
Sudden Debt's picture

they could go for the chock and aw effect by blocking it for 2 months so people would beg the president to print more MORE MMMMOOOORRRREEE MONEY!!!

People have no clue what money is. they just don't care!

Fri, 12/21/2012 - 21:29 | 3089013 DoChenRollingBearing
DoChenRollingBearing's picture

Sudden Debt, you are correct, most people have no idea, nor do they care.  Moar money!  And that is just what they will get...

"Be careful what you wish for, you might get it."  Someone wiser than me wrote that.

Fri, 12/21/2012 - 22:01 | 3089100 asteroids
asteroids's picture

Notice the VERY first thing Obozo said today referenced the market. The White House has got to be worried.

Sat, 12/22/2012 - 14:26 | 3089797 lakecity55
lakecity55's picture

Yeh, worried it hasn't crashed yet and everyone is broke.

 

Forward, Soviet!

Fri, 12/21/2012 - 22:11 | 3089132 ball-and-chain
ball-and-chain's picture

Cliff...smiff.

We aren't going over anything.

The Wall Street boys own Washington.

Wall Street wants a deal and money printing.

So a deal and money printing shall be produced.

What the Street wants, the Street gets.

And if you get in the Street's way, you get run over.

http://www.angrysinner.blogspot.kr/2012/12/yesterday-i-didnt-drive-jim-t...

Sat, 12/22/2012 - 02:10 | 3089360 AmericanFUPAcabra
AmericanFUPAcabra's picture

Beep. Boop. Insert comment semi related to thread topic. Post shitty blog with no relevance. Up arrow self. Boop.

Fri, 12/21/2012 - 19:51 | 3088687 Michaelwiseguy
Michaelwiseguy's picture

GDP goes negative, debt service declines, and defaults on debt increases. What more is there to know?

Watch cop go biserk when driver tells cop he can't search his vehicle without a warrant. Fast forward to 4:00.

Police Officer Goes Crazy When He's Told He Needs a Warrant to Search Car

http://www.youtube.com/watch?feature=player_embedded&v=x7Kw9-vTJYs#

 

Fri, 12/21/2012 - 20:09 | 3088822 negative rates
negative rates's picture

Police go crazy after dog searching the car, and finding nothing!

Fri, 12/21/2012 - 20:43 | 3088890 Ookspay
Ookspay's picture

Huh no dope in the car? Go get the drop bag, and if this civilian resists get the drop gun too.

Sat, 12/22/2012 - 10:48 | 3089622 shovelhead
shovelhead's picture

That was a prank stop by cops. It wasn't real.

Try reading the posters notes.

Sheesh.

Fri, 12/21/2012 - 19:29 | 3088709 riphowardkatz
riphowardkatz's picture

except Bernanke wants to prove them wrong because they are right.

Fri, 12/21/2012 - 19:35 | 3088711 knukles
knukles's picture

Next up....

Admitting that we are cloistered in a Liquidity Trap, the banking system chock full, essentially drowning in excess reserves, the shadow banking system dormant and recognizing that additional securities purchases will accomplish effectively naught as the system has reached the point of negative marginal returns....

Another effort is sought.
That only can be...
Further targeting of Economic Datum.

Having based the QE's and easy monetary policy upon the general level of unemployment, the next and only step is....

Targeting Nominal GDP

Meaning that in order to counteract the Real, Clear and Present Danger of a Deflationary Spiral with the Economy Contracting Sharply, not only via unemployment is the economy being targeted, but so too is a discernible measurably positive level of inflation.

Ergo, the Fed starts buying real assets.

Including the Best Indica of Inflation but not directly hitting the population's pocket books...

Gold and silver...
Or at least removes themselves from the suppression business.

As gold and silver prices rise....

Inflationary expectations rise, effectively translating into higher inflation measures, helping support a higher nominal level of GDP as the real GDP level has been shown to be.... stagnant...

Sounds like panic, no?
Well of course it is!

That's exactly where we be folks!

 

Fri, 12/21/2012 - 19:40 | 3088736 Bananamerican
Bananamerican's picture


"...the Fed starts buying real assets.

As gold and silver prices rise....

Inflationary expectations rise, effectively translating into higher inflation measures, helping support a higher nominal level of GDP..."

Well, a guy can dream....

Fri, 12/21/2012 - 23:35 | 3089237 Clowns on Acid
Clowns on Acid's picture

yeh knucks - But you diden't mention rising interest rates, collapsing dollar, spiking oil prices, spiking food prices....

And y'know the impact that might have on countries in Middle East...Europe, ....Oh I see...Obama / Bernake's Piven plan complete....now I understand. Thanks.

Sat, 12/22/2012 - 11:04 | 3089631 shovelhead
shovelhead's picture

I run into the same problem with my time experiments.

No matter how many times I stop the sweep hand of the clock, people keep moving around as if I hadn't stopped time...

Are these people stupid, or what?

I stopped time, Dammit. Stand still!

Sat, 12/22/2012 - 22:38 | 3090679 Iam_Silverman
Iam_Silverman's picture

"I stopped time, Dammit. Stand still!"

You must also stop their second hand.  Easy-Peasy.

Fri, 12/21/2012 - 19:35 | 3088721 Brian
Brian's picture

Isn't that why the market recovered today?  I think nobody forgot that.

Although I guess since we were red today, a few algos must have gotten stuck.  No, pretty sure that this is the very reason why the markets have levitated almost nonstop.  A little dumb money got squeezed out today, that is all.

Fri, 12/21/2012 - 19:42 | 3088740 YesWeKahn
YesWeKahn's picture

Fuck Bernanke the fucking idiot.

Fri, 12/21/2012 - 19:47 | 3088762 falak pema
falak pema's picture

this fiscal cliff is more political that financial. The REpubs will cave in and a 100 will align with the Dems. 

Fri, 12/21/2012 - 19:51 | 3088788 The Alarmist
The Alarmist's picture

It's like they are swerving to avoid a pothole on Mulholland Drive ... missed the pothole, but headed for the real cliff.  

Fri, 12/21/2012 - 19:48 | 3088775 HurricaneSeason
HurricaneSeason's picture

So, The Bernank is writing $1 Trillion a year in bad checks and the fiscal cliff means the annual deficit (not counting increased unemployment and lower GDP) will go from $1.3 Trillion to $700 Billion. He wants to write additional bad checks. He's got Europe to save too.

Fri, 12/21/2012 - 19:54 | 3088792 Seasmoke
Seasmoke's picture

No problem working Dec.25 , Bernanke does not believe in Christmas.

Sat, 12/22/2012 - 04:03 | 3089439 Peter Pan
Peter Pan's picture

Bernanke might not believe in Christmas but he sure does beleve that he is Santa Claus.

Fri, 12/21/2012 - 19:56 | 3088796 YesWeKahn
YesWeKahn's picture

He said that in such a way that he acts like God. He has all the money other people need.

Fri, 12/21/2012 - 20:07 | 3088817 DoChenRollingBearing
DoChenRollingBearing's picture

Tyler wrote (quoting Sen. Schumer): "Get to work, Mr. Chairman."

And just how hard would that work be?

1) Get on the phone, make a call, issue some orders.

2) Enter a PIN number maybe?

3) Pushing another button (the green PRINT one)?

Fri, 12/21/2012 - 20:07 | 3088818 negative rates
negative rates's picture

That's a whole other election cycle, get ready to politic!

Fri, 12/21/2012 - 20:10 | 3088827 HD
HD's picture

How many billions is "a bit"?

Fri, 12/21/2012 - 20:18 | 3088847 Yen Cross
Yen Cross's picture

One Giggle/

Fri, 12/21/2012 - 20:37 | 3088881 The Joker
The Joker's picture

And now, folks, it's time for "Who do you trust!" Hubba, hubba, hubba! Money, money, money! Who do you trust? Me? I'm giving away free money. And where is the Batman? HE'S AT HOME WASHING HIS TIGHTS!

Fri, 12/21/2012 - 23:29 | 3089230 Ness.
Ness.'s picture

I love that quote, so true.  Well played Joker.

Fri, 12/21/2012 - 20:43 | 3088891 Yen Cross
Yen Cross's picture

 The FED is just a pseudonym , for IOU.

Sat, 12/22/2012 - 12:32 | 3089685 OneTinSoldier66
OneTinSoldier66's picture

I disagree.

 

I believe it's much more like, 'ISTEALFROMU'.

Fri, 12/21/2012 - 21:03 | 3088931 Debtless
Debtless's picture

I'll stack to that.

Fri, 12/21/2012 - 21:54 | 3089018 itstippy
itstippy's picture

The Fed is forced to print because of this stubborn economic rough patch we're in.  American consumers are going to have to buckle down and start consuming some goddam consumables, and I mean now.  That includes you, ZH readers.

Buy some shit!  It's Christmas, for Christ's sake!  Lease a fucking Yukon for yourself and a Volt for the spouse and hit the malls.  Buy stuff!  Get a new wardrobe with matching shoes.  Pick up a Coach bag, Craftsman laser level, Starbucks expresso maker, giggling Elmo doll, electric fork, chrome banana hanger, iPiddle Mini, heated vibrating couch potato, titanium carrot shooter, chia bong, robotic vaccuum sweeper, Obamabobble head statue, inflatable eye patch, and ersatz flourescent tooth paint.  Throw in some impulse items and get the extended warranty on everything.

The Fed, Treasury, Congress, and White House have been doing all the heavy lifting for four years now.  Wake up, America, kick-start those animal spirits, and shop 'till you drop.  Your country needs you.

Oh yeah - pick up some more bourbon too.  It's running low. 

Sat, 12/22/2012 - 05:12 | 3089464 AnAnonymous
AnAnonymous's picture

Absolutely.

'Americans' know no other cure for every ailments of 'americanism' but more 'americanism'
and an overconsumption issue has to be solved by even more consumption.

For 'americans', it can not be otherwise.

Sat, 12/22/2012 - 08:02 | 3089525 Esso
Esso's picture

Oh man, nice rant, Tippy.

BTW, where can I get one of them titanium carrot shooters?

Sat, 12/22/2012 - 14:17 | 3089790 lakecity55
lakecity55's picture

I'm doin' my part.

Silver is on sale!

Keep Stackin'

Sat, 12/22/2012 - 22:43 | 3090693 Iam_Silverman
Iam_Silverman's picture

"American consumers are going to have to buckle down and start consuming some goddam consumables, and I mean now.  That includes you, ZH readers. Buy some shit!"

 

And... they took your advice to heart!

Went to three local gun shops today.  All packed to the brim. Yesterday, at Cheaper Than Dirt, had to park up the road past the parking lot!  Standing room only there, and at Cabela's, as well as at an Academy Sports and Outdoors today.  Stopped by another small local shop and they were hoppin' busy too.  No AR types to be had anywhere, including stripped lowers or uppers of any flavor. No magazines either - anywhere.

So, it seems that your message has gotten though.

Fri, 12/21/2012 - 21:34 | 3089027 Whiner
Whiner's picture

Stop your whining about the slow motion worldwide economic train wreck and start proposing what we do to face it. We have NO control over it. The culture and the world economy are in a death spiral. Don't tell me to buy dried food, PMs, and ammo ( I got them already ), tell me what to do to navigate the next to worse scenario. You don't burn down a super power in a digital flash, it's gonna be slower, then faster. It could go slowly for as long as a decade, then vaporize. Okay, I'm in PMs 40%, cash 30%, utes 5%, energy 15%, tobacco 5%,, a-BB bonds maturing -2years 15%. I am buying a little if the cliff gives me a drop, but not a lot. EU will take down Japan, then what's your move when blood is in the streets? You got any useful ideas?

Fri, 12/21/2012 - 21:50 | 3089078 Yen Cross
Yen Cross's picture

 Bring back the Gallows! Hang the fucking banksters/  Bring back the [chopping block]

  Draw and quarter a few of those bitchez...   That will send the message real fast! Cut those bankster hands off!

Sat, 12/22/2012 - 05:14 | 3089466 AnAnonymous
AnAnonymous's picture

The culture and the world economy are in a death spiral.
________________________

How could that be? This is an 'american' world and 'americanism' is the best thing to ever happen to humanity.

Sat, 12/22/2012 - 11:13 | 3089638 shovelhead
shovelhead's picture

Yup,

Start doing yoga streching exercises so you can comfortably kiss your ass goodbye.

You're welcome. Glad to help.

Sat, 12/22/2012 - 01:04 | 3089322 Clowns to the l...
Clowns to the left_ jokers to the right's picture

A fiscal trampoline for the bottom of the fiscal cliff. I hear they've got a sale on them at Walmart Ben, so keep on plopping 'em down one right next to other. as the economy keeps on bouncing along with no direction until they can finally tax us enough for it to go mostly on its own.

Sat, 12/22/2012 - 02:41 | 3089380 magpie
magpie's picture

There could be great cliff diving photo-ops during the Hawaian vacation...

Sat, 12/22/2012 - 14:22 | 3089787 lakecity55
lakecity55's picture

Say, do sharks swim the ocean waters around Hawayer?

Do they eat swimmers?

I'm scared someone could be bitten in half by a Giant Shark over the holidays.

What kind of bait would attract a Giant Shark ?

Should bait not be secured to prevent a Giant Shark Attack?

What if somebody lost their bait overboard? How could you retrieve it before a Giant Shark Attack ?

Jus' askin'

 

Sat, 12/22/2012 - 03:02 | 3089399 q99x2
q99x2's picture

You can start using Bitcoin and partially protect yourself against the inflation that way.

Sat, 12/22/2012 - 03:25 | 3089413 magpie
magpie's picture

Of course monetization will go on, no one in their right mind would doubt it. But going over the cliff even partially should be "deflationary" as in reducing monetary velocity and dampening economic activity (one could argue if it was there in the first place) overall. If this will be done on purpose with it primarily in mind is another question, e.g. stopping people from getting off the $ dollar bandwagon. Done on purpose it is a rate hike in disguise.

Sat, 12/22/2012 - 05:26 | 3089472 sessinpo
sessinpo's picture

A great concept, however, I trust nothing electronic.

 

It is interesting, I have made posts on why PMs are going down and presented my logical argument as to why. And of course I get the down arrows from PM bugs who don't reply with any post of substance to refute my argument. They are married to their investment, emotionally.

But in the case of bitcoins, I would rather hold physical PMs in times of emergencies.

Has anyone explored the potential hazards of bitcoins. I listen to Free Talk Radio occassionally which promotes bitcoins so I've heard of the benefits they promote. Have you thought of the potential problems? They claim decentralization but hat isn't true. As a system, any system, has to have certain protocols which come from who? Who can change those rules? Who can manipulate those rules? As an electronic system, who can HACK that system? For example, most of the smart phones are made overseas and it has been shown that some foreign companies installed software to track and steal data from US customers. That might include bitcoin data.

 

Secondly, regarding your post, I have made very strong statements regarding the economic environment with very little response. So I'll state it again. With all the massing printing, with all the QE infinity, with all the hidden financial subsidized programs within various departments, why haven't we seen massive inflation already? In other words, what I am saying is that the markets are telling you that inflation isn't the problem (the message between the lines that most people miss and thus lose on their investments). Gold should be over $3k. Oil shold be over $200/barrel. Gasoline should be over $6/gallon. Yet we have gold still below $2k, Oil still below $100/barrel and gasoline falling and likely to be nationally averaged below $3/gallon soon.

 

We are heading toward massive deflation and deleveraging where demand is the problem. And that means much lower prices in most markets. All the monetary easing and printing is being done to combat the deleveraging and liquidation of assets at much lower prices.

Sat, 12/22/2012 - 22:47 | 3090699 Iam_Silverman
Iam_Silverman's picture

"They are married to their investment, emotionally."

Sorry, but true PM bugs treat their PM's as a hedge against total money devaluation.  Same reason most of them also stockpile food and devices to protect themselves and their "hedges".

Sat, 12/22/2012 - 05:06 | 3089459 sessinpo
sessinpo's picture

Complete nonsense. The FRB is already committed to continued QE infinity. In other words they are already committed increase a bit. Another non-story. Of course BB would say that. He has to take "political" position of doing whatever to help. BB has gone to Congress numerous times now and made statements attemptinng to force Congress to take some sort of action. Those statements were purposely aimed at trying to lay the responsibility of the cliff on Congress as a fiscal problem and not a monetary problem.

 

The truth is we have both a fiscal and monetary problem. And the two groups that are responsible for those categories, Congress and the FRB, don't want to take responsibility.

 

Sat, 12/22/2012 - 09:07 | 3089548 eddiebe
eddiebe's picture

The real game is this: The fed keeps buying up everything in sight at the lowest interest possible, then turns around and allows the interest rate to go to say 12% forcing the gov. to seriously raise taxes and mega raid SS and medicare and everything else. Kinda like they did 30+ years ago. Then they link to gold so the interest money they siphon from the economy is actually worth something. That's how stupid Ben is. 

Sat, 12/22/2012 - 09:59 | 3089574 SmoothCoolSmoke
SmoothCoolSmoke's picture

I just wonder if someone somewhere is rubbing their hands together with glee just waiting for the right moment to toss a wrench into the whole works.  Take Putin for instance, we go off the cliff.....and he decides it's time to shut of the gas to Europe.  Or Iran decides to sink one in the Strait of Hormus (sp?). Or some other well planned out swan of some color.

Sat, 12/22/2012 - 11:19 | 3089641 shovelhead
shovelhead's picture

You guys just don't recognize a good Captain when you see one...

"Damn the torpedos...Full Speed Ahead."

Sat, 12/22/2012 - 16:17 | 3089928 Joebloinvestor
Joebloinvestor's picture

I really expect the big wake up call will be when our credit rating is restored because we went off the cliff.

Despite the political non-action and bickering, there is a mechanism in place that will deal with the debt.

That is what the ratings agencies want.

In stark contrast to the EU doing fuck all.

Sat, 12/22/2012 - 17:25 | 3090014 AGAU
AGAU's picture

I would imagine the buying and selling of bitcoins would be just like internet banking, as for the bitcoin algorithm and coin mining I would compare it to something like Piratebay, except any new bitcoin mined is verified by millions of other computers rathar than shared. The potential hazard is government intervention or the threat of, I think this already happened a year or two ago and the coin price took a serious hit. I like to compare the idea to online filesharing softwares and how difficult they are to shut down. It's on my to-do list to get some small amount of bitcoins where it's ok if the whole thing goes belly up.

I actually tried mining for a bit but you really need dozens of high powered computers chomping on the algorithm.

Having said that a few years ago when i first heard of bitcoin I would never have believed it would gain any real credibility but here we are.

Sat, 12/22/2012 - 19:22 | 3090290 Herdee
Herdee's picture

But,ask yourselves this question: Who in in the world has got the moula to buy all this back?Eventually the FED will have to unwind.That will push up interest rates.Will there be enough inflation created to offset the deflationary thinking?There has to be someone on the other side of the trade.Europe is broke,Japan is broke and China doesn't want or trust U.S. debt any longer.So who's going to buy it all back?That's the multi-trillion dollar debt question.

Sat, 12/22/2012 - 22:52 | 3090704 Iam_Silverman
Iam_Silverman's picture

"But,ask yourselves this question: Who in in the world has got the moula to buy all this back?"

What a silly question.  No moolah is needed.  The Primary Dealers will continue to buy Treasuries.  They will then return them to the Fed (as a sort of Repo-105 deal) and will instead be paid with Fed "assets" collected during the monetization era.

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