The Fiscal Cliff Is A Diversion: The Derivatives Tsunami And The Dollar Bubble

Paul Craig Roberts was Assistant Secretary of the Treasury during President Reagan’s first term. He was Associate Editor of the Wall Street Journal. He has held numerous academic appointments, including the William E. Simon Chair, Center for Strategic and International Studies, Georgetown University, and Senior Research Fellow, Hoover Institution, Stanford University.

paul-craig-roberts
Dr. Paul Craig Roberts

The Fiscal Cliff Is A Diversion: The Derivatives Tsunami and the Dollar Bubble (Paul Craig Roberts, Dec 17, 2012):

The “fiscal cliff” is another hoax designed to shift the attention of policymakers, the media, and the attentive public, if any, from huge problems to small ones.

The fiscal cliff is automatic spending cuts and tax increases in order to reduce the deficit by an insignificant amount over ten years if Congress takes no action itself to cut spending and to raise taxes. In other words, the “fiscal cliff” is going to happen either way.

The problem from the standpoint of conventional economics with the fiscal cliff is that it amounts to a double-barrel dose of austerity delivered to a faltering and recessionary economy. Ever since John Maynard Keynes, most economists have understood that austerity is not the answer to recession or depression.

Regardless, the fiscal cliff is about small numbers compared to the Derivatives Tsunami or to bond market and dollar market bubbles.

Read moreThe Fiscal Cliff Is A Diversion: The Derivatives Tsunami And The Dollar Bubble

House Republicans Propose $2.2 Trillion Fiscal-Cliff Plan

FYI.


House Republicans Propose $2.2 Trillion Fiscal-Cliff Plan (Bloomberg, Nov 3, 2012):

House Republicans, rejecting President Barack Obama’s demand for higher tax rates, countered with a $2.2 trillion deficit-cutting plan that would trim Medicare and Social Security and cap tax deductions for top earners.The proposal, in a letter today to Obama from House Speaker John Boehner and other Republican leaders, seeks $800 billion in tax revenue in the next decade and would slow the growth in Social Security cost-of-living payments. It would reduce entitlement program costs by at least $900 billion, including raising the Medicare eligibility age, and cut $300 billion in discretionary spending.

Read moreHouse Republicans Propose $2.2 Trillion Fiscal-Cliff Plan

US: The Ultimate Fiscal Cliff Cheat Sheet Infographic

The Ultimate Fiscal Cliff Cheat Sheet Infographic (ZeroHedge, Nov 30, 2012):

The Fiscal Cliff is the name given for the 2013 increase of Federal Government taxes and budget cuts. The Bush-era tax cuts expire and the 2013 “Budget Control Act” kicks in, among other budget cuts & new taxes. The Fiscal Cliff is set to reduce the 2013 US Government budget deficit by roughly half; will remove $607 Billion from economy (GDP), resulting in 4% drop, pushing it back into recession; it can NOT be avoided. It must happen to fix the budget deficit; any delay must be paid for later; it will NOT reduce the US debt, only slow down the growth. The Fiscal Cliff’s (new taxes and budget cuts) size and impact are visualized below in physical $100 bills.

Morgan Stanley’s Doom Scenario: Major Recession In 2013 (CNBC)

Preparing you for the ‘Greatest Depression’.


Morgan Stanley’s Doom Scenario: Major Recession in 2013 (CNBC, Nov 20, 2012):

The global economy is likely to be stuck in the “twilight zone” of sluggish growth in 2013, Morgan Stanley has warned, but if policymakers fail to act, it could get a lot worse.

The bank’s economics team forecasts a full-blown recession next year, under a pessimistic scenario, with global gross domestic product (GDP) likely to plunge 2 percent.“More than ever, the economic outlook hinges upon the actions taken or not taken by governments and central banks,” Morgan Stanley said in a report.

Under the bank’s more gloomy scenario, the U.S. would go over the “fiscal cliff” leading to a contraction in U.S. GDP for the first three quarters of 2013. In Europe, the bank’s pessimistic scenario assumes a failure of the European Central Bank (ECB) in cutting rates and a delay of its bond-buying program.

Read moreMorgan Stanley’s Doom Scenario: Major Recession In 2013 (CNBC)

Will The Wealthy Race To Dump Stocks And Other Financial Assets Before The Fiscal Cliff Kicks In?

From the article (Famous investor Marc Faber):

In fact, Faber is absolutely convinced that a full-blown stock market crash is coming no matter what happens with the fiscal cliff…

“I think the whole global financial system will have to be reset and it won’t be reset by central bankers but by imploding markets — either the currency [markets, debt market or stock markets,” he said. “It will happen — it will happen one day and then we’ll be lucky if we still have 50 percent of the asset values that we have today.”

Don’t miss:

MUST-SEE: The Eight Scariest Charts For Equity Bulls

Famous Investor Marc Faber’s Asset Protection Plan: ‘Buy A Machine Gun’, No Really, ‘You’re Right, Buy A Tank’ (Video)

A 21% Chance Of A 50% Plunge In The S&P 500?

Stock Market Fragility Fast Approaching ‘Flash Crash’ Levels


Will The Wealthy Race To Dump Stocks And Other Financial Assets Before The Fiscal Cliff Kicks In? (Economic Collapse Nov 13, 2012):

The election results made it abundantly clear that taxes are going to be going up, and right now a lot of wealthy people all over America are trying to figure out how to best position themselves for the hit that is coming.  There are a whole host of tax cuts that are set to expire on December 31st, and many analysts are now speculating that we could see a race to dump stocks and other financial assets before 2013 in order to get better tax treatment on those sales.  Of course it is still possible that Congress may reach a bargain which would avoid these tax increases, but with each passing day that appears to be increasingly unlikely – especially regarding the tax increases on the wealthy.  Whatever you may believe about this politically, the truth is that we should all be able to agree that these looming tax increases provide an incentive for wealthy people to sell off financial assets now rather than later.  After all, there are very few people out there that would actually prefer to pay higher taxes on purpose.  If the race to dump financial assets becomes a landslide, could this push stocks down significantly late in the year?  Already there are all sorts of technical signs that indicate that stocks are ready for a “correction” at the very least.  For example, the S&P 500 has already closed below its 200 day moving average for several days in a row.  Could the “sell off” that has already begun become a race for the exits?

Read moreWill The Wealthy Race To Dump Stocks And Other Financial Assets Before The Fiscal Cliff Kicks In?

Rep. Ron Paul’s Farewell To Congress (Video)

A MUST-SEE!!!


“My goals in 1976 were the same as they are today: Promote peace and prosperity by a strict adherence to the principles of individual liberty.”

…”economic ignorance is common place, as the failed policies of Keynesianism are continually promoted”…

… “psychopathic totalitarians endorse government initiatives to change our world” …

Forward to 2:08:40:

Obama To Demand $1.6 Trillion In Tax Hikes Over Ten Years, Double Previously Expected

We told you so:

“Deficits mean future tax increases, pure and simple. Deficit spending should be viewed as a tax on future generations, and politicians who create deficits should be exposed as tax hikers.”
– Ron Paul

“When a country embarks on deficit financing and inflationism you wipe out the middle class and wealth is transferred from the middle class and the poor to the rich.”
– Ron Paul

“Believe me, the next step is a currency crisis because there will be a rejection of the dollar, the rejection of the dollar is a big, big event, and then your personal liberties are going to be severely threatened.”
– Ron Paul

(And NO, I do not think that elite puppet Romney would have been a better choice than elite puppet Obama.)


Obama To Demand $1.6 Trillion In Tax Hikes Over Ten Years, Double Previously Expected (ZeroHedge, Nov 13, 2012):

If the Fiscal Cliff negotiations are supposed to result in a bipartisan compromise, it is safe that the initial shots fired so far are about as extreme as can possibly be. As per our previous assessment of the status quo, with the GOP firmly against any tax hike, many were expecting the first olive branch to come from the generous victor – Barack Obama. Yet on the contrary, the WSJ reports, Obama’s gambit will be to ask for double what the preliminary negotiations from the “debt deficit” summer of 2011 indicated would be the Democrats demand for tax revenue increase. To wit: “President Barack Obama will begin budget negotiations with congressional leaders Friday by calling for $1.6 trillion in additional tax revenue over the next decade, far more than Republicans are likely to accept and double the $800 billion discussed in talks with GOP leaders during the summer of 2011. Mr. Obama, in a meeting Tuesday with union leaders and other liberal activists, also pledged to hang tough in seeking tax increases on wealthy Americans.” Granted, there was a tiny conciliation loophole still open, after he made no specific commitment to leave unscathed domestic programs such as Medicare, yet this is one program that the GOP will likely not find much solace in cutting. In other words, all the preliminary talk of one party being open to this or that, was, naturally, just that, with a whole lot of theatrics, politics and teleprompting thrown into the mix. The one hope is that the initial demands are so ludicrous on both sides, that some leeway may be seen as a victory by a given party’s constituents. Yet that is unlikely: as we have noted on many occasions in the past, any compromise will result in swift condemnation in a congress that has never been as more polarized in history.

From the WSJ:

Kevin Smith, a spokesman for House Speaker John Boehner (R., Ohio), dismissed the president’s opening position for the negotiations. He said Mr. Boehner’s proposal to revamp the tax code and entitlement programs is “consistent with the president’s call for a ‘balanced’ approach.”

Read moreObama To Demand $1.6 Trillion In Tax Hikes Over Ten Years, Double Previously Expected

PIMCO’s Bill Gross: US Fiscal Cliff Deeper Than Advertised. Its A Grand Canyon.

Deep Sunday Morning Thoughts From Bill Gross (ZeroHedge, Nov 11, 2012):

Just because Jack Handey never got to manage $1+ trillion in debt…

Read morePIMCO’s Bill Gross: US Fiscal Cliff Deeper Than Advertised. Its A Grand Canyon.