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An Emerging Consensus to Go Over the Fiscal Cliff?

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Published : December 09th, 2012
300 words - Reading time : 0 - 1 minutes
( 4 votes, 3.5/5 ) , 2 commentaries
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Category : Crisis Watch





In last weekend’s commentary for the investment newsletter, I put the odds of going over the “fiscal cliff” at about one-in-five, meaning that I figured there is about an 80 percent chance that, somehow, a deal will get done in Washington to avoid most of the tax hikes and spending cuts slated to go into effect on January 1st.

It’s only been a few days, but I’m already rethinking that view in light of all the recent news coverage and, at this juncture, I’d say we’re definitely moving closer to 50-50.

There have been a few elected officials who have said that going over the cliff wouldn’t be so bad and, now, an unscientific poll at the LA Times indicates a surprisingly large number of respondents share that view.

Of course, most of the people responding are Californians and, as far as I can tell, Democrats get the better end of the deal if we go over the cliff, so, this result should be taken with a grain of salt.

The accompanying commentary recounts some of the history of the Bush-era tax cuts that are at the center of the current debate. Recall that the first round of these cuts very early in the decade was aimed at giving the American people back some of their tax money and, then, when the internet boom turned to bust, the justification quickly turned to the tax cuts being a much needed stimulus.

Of course, former Federal Reserve Chairman Alan Greenspan played a key role in these tax cuts as he, effectively, gave his blessing. Since his reputation was quite a bit better then than it is today, that’s all it took for a lot of people to think this big a tax cut for years to come might be a good idea.



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Tim Iacono is the founder of Iacono Research, a subscription service providing market commentary and investment advisory services specializing in commodity based investing.
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This year end 'fiscal cliff' is but a small waterfall compared to what we're just experienced. On Nov 6th we went over Niargra Falls (sans barrel) when the majority voters decided to partake of the minority's assets -- and abetted by the Democratic Part  Read more
Jim C. - 12/10/2012 at 8:45 PM GMT
Rating :  7  0
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This year end 'fiscal cliff' is but a small waterfall compared to what we're just experienced. On Nov 6th we went over Niargra Falls (sans barrel) when the majority voters decided to partake of the minority's assets -- and abetted by the Democratic Party as a means of retaining power. We are now in the London of Oliver Twist with Fagin in charge leading a chorus of "We've going to pick a pocket or two."

Worry about year end 'fiscal cliff'? Imagine a man just having had his throat cut concerned about stubbing his toe.
Rate :   7  0Rating :   7
I would be more amazed if we don't go over the cliff.

Two possibilities.
#1 Both sides knew this agreement was the only option. Blame the other side for it being so onerous because they wouldn't bargain..
#2 Both sides knew the other side would find this too onerous and come back to bargain.

The difference between medicine and poison is dose. The nation could recover from what would be a fatal dose to politicians.
Rate :   2  3Rating :   -1