Sunday, December 30, 2012

Fiscal cliff negotiations-Kicking the Can

ONE NATION UNDER DEBT"There are two ways to conquer and enslave a nation. One is by sword.The other is by debt."John Adams 1826
The United States is barely at the beginning of this can-kicking process.
 
There have only been a couple of "summit meetings" so far, barely enough to get anywhere at all. Everybody is lying to the press and blaming each other except that, as usual, the mainstream media is totally in the tank for President Obama, irrespective of anything else going on, and will always agree with whatever he says, even when it's totally incoherent.

As of this writing on Saturday evening, there appears to be a good chance of a "deal" that will raise tax on the "rich," which is what President Obama wants, and there will also probably be some spending increases, and an increase in the debt ceiling. Thus, any deal will actually make things worse, but President Obama and the mainstream media will declare it to be a major victory and stocks will rise.

Or, perhaps there won't be a mini-deal. Yesterday I heard analysts say that we may go over the "fiscal cliff," which will result in huge tax increases on everyone, but then agreement will be reached next week (because then the Republicans will be voting for a tax decrease rather than for a tax increase) ... or by January 14 ... or by January 21 ... or by March.

If a "final solution" cannot be reached now, then how stupid do you have to be to think that one will be found in March?

The Kick the Can Theory predicts that there will be multiple "summit meetings" and confrontations, that all parties will continue to lie to the press and blame each other, and that no agreement will be reached until just a few days before some real crisis. At that point, there will be some agreement on some part of the issue, just enough to delay the current crisis a few more weeks. The cycle will repeat over and over until we're at war. As in the case of Greece, no actual solution exists.

By the way, I haven't read anything about this, but I'm going to guess that a lot of Europeans are looking forward with glee to the Schadenfreude they're expecting to feel when America has to go through the same farcical process that they went through.

America is truly Greece now. see the 30-Dec-12 World View -- The 'Kick the Can Theory' and the Fiscal Cliff thread of the Generational Dynamics forum.

Related: Bloomberg

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