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Thread: Over the fiscal cliff: Soft or hard landing?

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    Member Zippyjuan's Avatar
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    Default Over the fiscal cliff: Soft or hard landing?

    Somehow, I think that if we do go over that "cliff" it won't be as scary or as tragic as they hype makes it sound (these "promised tragedies" are never as bad as they are made to sound). I would like to see serious work done on the deficit and think that the automatic cuts will probably be bigger than anything else which might come along. This is why I kinda hope it happens. One to get the cuts and two to see that it wasn't the end of the world as we know it.

    NEW YEAR'S HEADACHE

    Partly by fate, partly by design, some scary fiscal forces come together at the start of 2013 unless Congress and Obama act to stop them. They include:

    — Some $536 billion in tax increases, touching nearly all Americans, because various federal tax cuts and breaks expire at year's end.

    — About $110 billion in spending cuts divided equally between the military and most other federal departments. That's about 8 percent of their annual budgets, 9 percent for the Pentagon.

    Hitting the national economy with that double whammy of tax increases and spending cuts is what's called going over the "fiscal cliff." If allowed to unfold over 2013, it would lead to recession, a big jump in unemployment and financial market turmoil, economists predict.

    ___

    WHAT IF THEY MISS THE DEADLINE?

    If New Year's Day arrives without a deal, the nation shouldn't plunge onto the shoals of recession immediately. There still might be time to engineer a soft landing.

    So long as lawmakers and the president appear to be working toward agreement, the tax hikes and spending cuts could mostly be held at bay for a few weeks. Then they could be repealed retroactively once a deal was reached.

    The big wild card is the stock market and the nation's financial confidence: Would traders start to panic if Washington appeared unable to reach accord? Would worried consumers and businesses sharply reduce their spending? In what could be a preview, stock prices in the U.S. and Europe dropped Friday on waning hopes that Obama and key lawmakers would reach an 11th-hour compromise.

    Federal Reserve Chairman Ben Bernanke has warned lawmakers that the economy is already suffering from the uncertainty and they shouldn't risk making it worse by blowing past their deadline.

    ___

    WHAT IF THEY NEVER AGREE?

    If negotiations between Obama and Congress collapse completely, 2013 looks like a rocky year.

    Taxes would jump $2,400 on average for families with incomes of $50,000 to $75,000, according to a study by the nonpartisan Tax Policy Center. Because consumers would get less of their paychecks to spend, businesses and jobs would suffer.

    At the same time, Americans would feel cuts in government services; some federal workers would be furloughed or laid off and companies would lose government business. The nation would lose up to 3.4 million jobs, the Congressional Budget Office predicts.

    "The consequences of that would be felt by everybody," Bernanke says.

    ___

    THE TAXES

    Much of the disagreement surrounds the George W. Bush-era income tax cuts, and whether those rates should be allowed to rise for the nation's wealthiest taxpayers. Both political parties say they want to protect the middle class from tax increases.

    Several tax breaks begun in 2009 to stimulate the economy by aiding low- and middle-income families are also set to expire Jan. 1. The alternative minimum tax would expand to catch 28 million more taxpayers, with an average increase of $3,700 a year. Taxes on investments would rise, too. More deaths would be covered by the federal estate tax, and the rate climbs from 35 percent to 55 percent. Some corporate tax breaks would end.

    The temporary Social Security payroll tax cut also is due to expire. That tax break for most Americans seems likely to end even if a fiscal cliff deal is reached, now that Obama has backed down from his call to prolong it as an economic stimulus.

    ___

    THE SPENDING

    If the nation goes over the fiscal cliff, budget cuts of 8 percent or 9 percent would hit most of the federal government, touching all sorts of things from agriculture to law enforcement and the military to weather forecasting. A few areas, such as Social Security benefits, Veterans Affairs and some programs for the poor, are exempt.

    ___

    THERE'S MORE AT STAKE

    All sorts of stuff could get wrapped up in the fiscal cliff deal-making. A sampling:

    — Some 2 million jobless Americans may lose their federal unemployment aid. Obama wants to continue the benefits extension as part of the deal; Republicans say it's too costly.

    — Social Security recipients might see their checks grow more slowly. As part of a possible deal, Obama and Republican leaders want to change the way cost-of-living adjustments are calculated, which would mean smaller checks over the years for retirees who get Social Security, veterans' benefits or government pensions.

    — The price of milk could double. If Congress doesn't provide a fix for expiring dairy price supports before Jan. 1, milk-drinking families could feel the pinch. One scenario is to attach a farm bill extension to the fiscal cliff legislation — if a compromise is reached in time.

    — Millions of taxpayers who want to file their 2012 returns before mid-March will be held up while they wait to see if Congress comes through with a deal to stop the alternative minimum tax from hitting more people.

    ___

    CALL THE WHOLE THING OFF?

    In theory, Congress and Obama could just say no to the fiscal cliff, by extending all the tax cuts and overturning the automatic spending reductions in current law. But both Republicans and Democrats agree it's time to take steps to put the nation on a path away from a future of crippling debt.

    Indeed, the automatic spending cuts set for January were created as a last-ditch effort to force Congress to deal with the debt problem.

    If Washington bypassed the fiscal cliff, the next crisis would be just around the corner, in late February or early March, when the government reaches a $16.4 trillion ceiling on the amount of money it can borrow.

    Boehner says Republicans won't go along with raising the limit on government borrowing unless the increase is matched by spending cuts to help attack the long-term debt problem. Failing to raise the debt ceiling could lead to a first-ever U.S. default that would roil the financial markets and shake worldwide confidence in the United States.

    To avoid that scenario, Obama and Boehner are trying to wrap a debt limit agreement into the fiscal cliff negotiations.

    ___

    SO WHAT'S THE HOLDUP?

    They're at loggerheads over some big questions.

    Obama says any deal must include higher taxes for the wealthiest Americans. Many House Republicans oppose raising anyone's tax rates. Boehner tried to get the House to vote for higher taxes only on incomes above $1 million but dropped the effort when it became clear he didn't have the votes.

    Republicans also insist on deeper spending cuts than Democrats want to make. And they want to bring the nation's long-term debt under control by significantly curtailing the growth of Medicare, Medicaid and Social Security — changes that many Democrats oppose.

    Obama, meanwhile, wants more temporary economic "stimulus" spending to help speed up a sluggish recovery. Republicans say the nation can't afford it.

    ___

    IT'S NOT JUST WASHINGTON

    Seems like they could just make nice, shake hands and split their differences, right?

    But there's a reason neither side wants to give ground. The two parties represent a divided and inconsistent America. True, Obama just won re-election. But voters also chose a Republican majority in the House.

    Republicans and Democrats alike say they are doing what the voters back home want.

    Neither side has a clear advantage in public opinion. In an Associated Press-GfK poll, 43 percent said they trust the Democrats more to manage the federal budget deficit and 40 percent preferred the Republicans. There's a similar split on who's more trusted with taxes.

    About half of Americans support higher taxes for the wealthy, the poll says, and about 10 percent want tax increases all around. Still, almost half say cutting government services, not raising taxes, should be the main focus of lawmakers as they try to balance the budget.

    When asked about specific budget cuts being discussed in Washington, few Americans express support for them.
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    Last edited by Zippyjuan; 12-29-2012 at 07:48 PM.
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    The "cuts" are not cuts. They are slower spending increases than what is called for in the baseline budget.
    "And now that the legislators and do-gooders have so futilely inflicted so many systems upon society, may they finally end where they should have begun: May they reject all systems, and try liberty; for liberty is an acknowledgment of faith in God and His works." - Bastiat

    "It is difficult to free fools from the chains they revere." - Voltaire

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    Member bxm042's Avatar
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    This is more like a fiscal bump on the way to the cliff
    The Matrix is a system, Neo. That system is our enemy. But when you're inside, you look around, what do you see? Businessmen, teachers, lawyers, carpenters. The very minds of the people we are trying to save. But until we do, these people are still a part of that system and that makes them our enemy. You have to understand, most of these people are not ready to be unplugged. And many of them are so inured, so hopelessly dependent on the system, that they will fight to protect it.

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    The fiscal cliff of Congress that everyone in the media is talking about will be about as impactful on everyone as Y2K.

    The real fiscal cliff that almost nobody in the media is talking about...that unavoidable inevitable massive global implosion event is going to be as sudden as it will be devastating beyond all belief, in a way the world has never experienced before in all of human history. And I could be wrong, but I think that ground zero for that global domino effect will begin with Japan, of all places, finally coming to the end of its own fiscal rope.


    EDIT: Now, after all these years, I think I have found new meaning to the lullaby "Rock-a-bye Baby".
    Last edited by Steven Douglas; 12-29-2012 at 09:32 PM.

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    The money absent from the economy should trigger immediate beginning of the next official recession , with rising food prices , due to corn /drought etc .

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    I wouldn't be surprised if an "extended recession" was just coincidental timing of an economy continuing to go sour anyway.

    Still, almost half say cutting government services, not raising taxes, should be the main focus of lawmakers as they try to balance the budget.

    When asked about specific budget cuts being discussed in Washington, few Americans express support for them.
    This is why I love Americans... People want less taxes but the same amount of government services.

    Lastly, did you notice that ever since after the election the talk of "recovery" was changed to "fiscal cliff?" It's a bunch of 1984-esque nonsense in the end.

  8. #7

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    http://www.ronpaulforums.com/showthr...HANDGUNS/page6

    Quote Originally Posted by logikal View Post
    Here's what will happen. They will eventually remove "handguns" from the bill to make it look like a good compromise and it will pass.
    Quote Originally Posted by devil21 View Post
    This is generally the playbook they go by. First bill is so egregious that removing the most heinous of measures makes it look reasonable by the time it gets to the floor of Congress. The NRA will swoop in to claim a "victory" (compromise) for gun owners while the elite still get what they wanted all along, which is a ban on equipment that could rival that of their goons.

    Ben Bernanke, 8/31/12, Jackson Hole Speech aka QE AD INFINITUM:

    "...Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability..."

    http://www.huffingtonpost.com/2012/0...n_1846529.html
    Last edited by cheapseats; 12-30-2012 at 06:57 AM.

  9. #8

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    Obama is using this as a BLAME THE REPUBLICANS play.

    The fiscal cliff will be used to disrupt markets and make it seem as though prudent money decisions is a bad thing.

    The cliff should be 5 times larger.

    Once the official recession meme is spewed, it will be a hayday against fiscal conservatives. The established powers will then have the political leverage necessary to break the back of America by destroying it's currency through untenable debt and policy obligations.

    Believe me, I'd love the opposite to occur. If fiscal sanity prevails, the cuts will render the US economy a global safeheaven (again) buying more time for America to get it's house in order (FOR REAL this time).

    I think the first option will occur, but the opposite may occur. Japan is a mess and the Euro is a catastrophe. These two safe haven markets are WORSE then the US.

    Kyle Bass made a salient point. The US has already gone through bank recapitalization - the other two have not.

    This is the point of no return on both sides of the aisle. Either the cuts in spending occur AND that trend continues (positive for the US) or it contiues to obliterate itself by printing and promising things that are delusional and destructive.

    Jim Rogers is correct. 2013 is going to be something to be remembered.
    "Like an army falling, one by one by one" - Linkin Park

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    Quote Originally Posted by Steven Douglas View Post
    The fiscal cliff of Congress that everyone in the media is talking about will be about as impactful on everyone as Y2K.

    The real fiscal cliff that almost nobody in the media is talking about...that unavoidable inevitable massive global implosion event is going to be as sudden as it will be devastating beyond all belief, in a way the world has never experienced before in all of human history. And I could be wrong, but I think that ground zero for that global domino effect will begin with Japan, of all places, finally coming to the end of its own fiscal rope.


    EDIT: Now, after all these years, I think I have found new meaning to the lullaby "Rock-a-bye Baby".
    Yup. They are fighting about what shape of band-aid they should put on the gaping chest wound and severed artery. It will not matter.
    The proper concern of society is the preservation of individual freedom; the proper concern of the individual is the harmony of society.

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    Quote Originally Posted by Acala View Post
    Yup. They are fighting about what shape of band-aid they should put on the gaping chest wound and severed artery. It will not matter.
    That is how it looks to me.

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    Quote Originally Posted by KrokHead View Post
    I wouldn't be surprised if an "extended recession" was just coincidental timing of an economy continuing to go sour anyway.



    This is why I love Americans... People want less taxes but the same amount of government services.

    Lastly, did you notice that ever since after the election the talk of "recovery" was changed to "fiscal cliff?" It's a bunch of 1984-esque nonsense in the end.
    Because the NWO knows there's no recovery. It was all make believe to get Romney nominated and 'Bama re-elected. Back to business as usual: gutting the economies of the industrialized world and enslaving their people.

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    [QUOTE=cheapseats;4796930]http://www.ronpaulforums.com/showthr...HANDGUNS/page6

    Originally Posted by logikal
    Here's what will happen. They will eventually remove "handguns" from the bill to make it look like a good compromise and it will pass.
    Originally Posted by devil21
    This is generally the playbook they go by. First bill is so egregious that removing the most heinous of measures makes it look reasonable by the time it gets to the floor of Congress. The NRA will swoop in to claim a "victory" (compromise) for gun owners while the elite still get what they wanted all along, which is a ban on equipment that could rival that of their goons.

    Ben Bernanke, 8/31/12, Jackson Hole Speech aka QE AD INFINITUM:

    "...Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability..."

    http://www.huffingtonpost.com/2012/0...n_1846529.html


    Quote Originally Posted by loveableteddybear View Post
    ...Back to business as usual...

    I draw particular attention to POLICY ACCOMMODATION AS NEEDED.

    Into this quagmire longer than we've been stuck in Afghanistan, JAPAN just passed an Economic Stimulus package.

    Japanese public debt is 200+ percent of GDP. I do not observe Deciders committing seppuku in disgrace.

    Latterly golden, now platinum, parachutes are ALL about Soft Landings.

    "Ranking" Public Officials effectively have 'em, too...parachutes.

    Like bowling with bumpers.
    Last edited by cheapseats; 01-11-2013 at 03:09 AM.

  14. #13

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    Set aside the palaces and empires of the Uber Rich. Consider "only" the Officials & Executives who are Implementers/LACKEYS for Deciders.

    Expensive (valuable) well-appointed digs in safe 'hoods (MANY gated/walled), preferential treatment in Society AND before the Law, AMAZING pensions, lotsa PERKS, chauffeur-squired town cars, personal security, family security, assorted OTHER advantages for spouse/offspring, private schools, investment portfolios, vacation homes...Kent Conrad bought HIS SECOND HOME with a "sweetheart deal" from gansta Anthony Mozillo; Chris Dodd ALSO received a sweetheart/VIP "Friends of Anthony Mozillo" mortgage; both claimed they DIDN'T KNOW (Dodd was on the powerful Senate BANKING Committee).

    In 2009, maybe even 2010, when I was I still bothering to continue to rant at a go-along-to-get-along Money Man at Merrill Lynch...which was up to its EYEBALLS in the quote-unquote Financial Crisis and which lost LOTS of money on low-risk-protect-the-principal portfolios...I was STILL ranting about our BOTTOM-LINE NEED to throw the friggin' book at Asshole Executives, he said something patronizing like "Don't worry, there's time, they'll get to that eventually." Yada yada about "all asset classes" taking a 50% cut but, LOOK, how we're on the road to recovery, yada yada.

    E. Stanley O'Neal was the (nobody mentions FIRST BLACK) Chief Executive Officer at Merrill Lynch during the halcyon days of bundling and trading high-risk mortgages (and of Houses betting against their Clients, it bears never forgetting). He sashayed with a BONUS of over $50,000,000. FIFTY-FIVE POINT SIX MILLION, if memory serves. Sometimes I have a memory like a steel trap, sometimes I have a memory like Bush-era Attorney General Alberto Gonzales.

    E. Stanley O'Neal sashayed from Merrill Lynch onto the Board of Directors at ALCOA.

    Be assured that Deciders & Implementers CAN keep the charade alive for THEIR meaningful futures. Look to Japan, look to Japan.

    Our "representatives" have voted themselves the power to kick this can LONGER THAN WE WILL LIVE. They have kids & grandkids.

    ROOTING FOR/"ASSISTING" COLLAPSE is entirely different from TAKING ACTION to at least TRY to stop...to at least curb/mitigate...the psychotic, criminal-in-spirit-of-Law ABUSE OF POWER.
    Last edited by cheapseats; 01-14-2013 at 08:40 AM.





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