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Investment Analysis Clubs / Macro Economic Trends and Risks
|Subject: Re: The Fiscal Cliff-Solving the wrong problem||Date: 11/13/2012 11:20 PM|
|Author: salaryguru||Number: 408420 of 473765|
Yoda makes a good point in pointing out that addressing the tax cuts of item 3 (the wealthy) satisfies the majority of the population's fascination with punishing someone else (and especially one who is better off).
Saying that this is a good point does not make it one. Although I have talked with many who believe that raising the tax rates on the wealthy is needed, I don't know anyone who I think believes that this statement would be an accurate assessment of their views. You disagree with them, so you have tried to diminish their opinion in the way you stated this.
My proposal (repeated here a number of times) that the cuts for everyone (rich and middle class) should be allowed to expire. That simple non-action would address 60% of Yoda's list. It is also a political non-starter as it would negatively impact the majority of Americans.
That's a lot of people's proposal, and I think it is not out of the realm of possibility that it happens - at least initially. If both parties believe they can effectively blame the other one for refusing to "compromise" to their position, they might let this happen. Of course, if the voters/press turns on one of the parties, they will capitulate.
The "Fiscal Cliff" should more accurately be called a poison pill. How badly our economy would be mauled by crossing that line will be dwarfed by the perception that it is a REALLY bad thing. As perception becomes reality, the destruction in the various markets would be a self-fulfilling prophesy.
And what analysis can you provide to back this up? These changes will not suddenly change economic life in America. It will take many months or years to actually quantify the impact. If the impact begins to be very negative in February or March or September . . . Congress can act to modify these points at that time. I just haven't seen any actual believable analysis to back up the chicken little cries.
The frightening aspect of this matter is that, even here on Metar, with all of our attention to this stuff, when faced with the facts (not opinions) that Yoda has presented, there are still a handful who persist in arguing tangents.
Hmmmm . . . When I list the actual facts, I just don't see the reason for all the fear. Without some fairly significant analysis to go along with them, the facts are just not very compelling.
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