How The Fiscal Cliff Talks Collapsed

Related info:

Ellen Brown: Fiscal Cliff: Let’s Call Their Bluff

Dr. Paul Craig Roberts:

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


How The Fiscal Cliff Talks Collapsed (ZeroHedge, Dec 23, 2012):

The collapse of the Fiscal Cliff talks should come as no surprise to anyone (except, of course, for all those “expert” political commentators virtually all of whom saw a deal by December 31: a full list of names is forthcoming). The reason: a simple one – a House torn, polarized to a record extreme, and a political environment in which the two parties, in the aftermath of a presidential election humiliating to the GOP, reached unseen before antagonism toward each other. In this context, it was absolutely inevitable that America would see a replica of last summer’s debt ceiling collapse, which mandated a market intervention, in the form of a crash, and the wipeout of hundreds of billions in wealth – sadly the only catalyst that both parties and their electorate, understand. We had prefaced this explicitly in early November when we said that “the lame duck congress will posture, prance and pout. And it is a certainty that in the [time] remaining it will get nothing done. Which means, that once again, it will be up to the market, just like last August, just like October of 2008, to implode and to shock Congress into awakening and coming up with a compromise of sorts.” Which of course brought us to Thursday night’s mini-TARP moment.

If you missed Thursday’s ES flash crash, fear not: there will be more “TARP moments” as first the Fed is brought into action (as we reminded yesterday), and then, as the final deadline – that of the expiration of various debt ceiling extension gimmicks which takes place in March, and which is the real deadline for a deal. Nonetheless, there are those forensic detectives who are addicted to every single political twist and turn, and who are curious just where and when the Fiscal Cliff talks broke down in the past week. In this regard, the WSJ provides a useful timeline.

From the WSJ:

Mr. Obama repeatedly lost patience with the speaker as negotiations faltered. In an Oval Office meeting last week, he told Mr. Boehner that if the sides didn’t reach agreement, he would use his inaugural address and his State of the Union speech to tell the country the Republicans were at fault.

At one point, according to notes taken by a participant, Mr. Boehner told the president, “I put $800 billion [in tax revenue] on the table. What do I get for that?”

“You get nothing,” the president said. “I get that for free.”

Well, you can’t fault the man at not demonstrating “leadership” at crucial junctions: after all it’s only fair he gets something for free.

Read moreHow The Fiscal Cliff Talks Collapsed

Boehner Offers Debt-Ceiling Increase In Cliff Compromise

Boehner offers debt-ceiling increase in cliff compromise (Washington Post, Dec 17, 2012):

House Speaker John A. Boehner has offered to push any fight over the federal debt limit off for a year, a concession that would deprive Republicans of leverage in the budget battle but is breathing new life into stalled talks over the year-end “fiscal cliff.”The offer came Friday, according to people in both parties familiar with the talks, as part of the latest effort by Boehner (R-Ohio) to strike a deal with President Obama to replace more than $500 billion in painful deficit-reduction measures set to take effect in January. 

With the national debt already bumping up against a $16.4 trillion cap set last year, Congress risks a government default unless it acts to raise the debt ceiling in the next few months. Some Republicans had argued that party leaders should use the threat of default to demand additional spending cuts from Obama.

Read moreBoehner Offers Debt-Ceiling Increase In Cliff Compromise