Dana Blankenhorn's  Instablog

For the last few weeks CNBC has become "Comedy Central," with all guests expected to harrumph and act troubled about the so-called "fiscal cliff."

They've been talking the market down when there is no way for the market to go but up. We still have a natural gas glut, we're on track to lead the world in oil production a few years from now, and costs for both solar and biofuels continue to decline. With inflation in check and housing starting to pick up, with car sales rising and Christmas looking like a winner, and new technologies abounding everywhere, why not buy?

Buy American stocks. Buy the QQQ, buy the DIS, buy the SPY. Buy.

As I've written before, the "fiscal cliff" is a scam. It's designed by the ultra-wealthy to pass the costs of the last decade's wars and tax cuts on the poor.

Look at who's represented on the so-called "Fix the Debt" group. Most are affiliated with Peter G. Peterson, a very rich man and a long-time opponent of the social safety net. They got theirs, they got a lot of it from the government in the form of defense contracts, but even though you paid for yours, you're not going to get it, because they're going to use the debt to take it away from you.

If debt were really the issue in the "fiscal cliff" these guys would be in barrels lining up to go over it. Sequestration is an answer to the debt, a collection of tax increases and spending cuts designed last year to do what Congress had found itself manifestly unable to do, cut our debt.

So what are Peterson and his friends wringing their hands about? They don't like tax hikes - who does? They don't like their own interests in government spending to be put at risk - who does? They don't like the priorities here - we just had an election about those priorities and their side lost.

Rise above what? If we're rising above anything, tax increases have to be part of the mix. Why is "Fix the Debt" fighting so hard to rescind these tax increases? And why is the President even concerned?

It's because, on balance, there's more deficit reduction in the package than the economy can take right now. It's the right medicine, there's just way too much of it. Growth, in the near run, will take a hit if we go over the cliff. Which increases the debt rather than decreases it. That's what the United Kingdom is experiencing.

But that's no reason to sell stocks. It's an opportunity to get a better deal, either now or next month. One with a little less austerity. Which is what Wall Street will be clamoring for if January 1 comes with no deal. Bring on the Obama tax cuts, they'll say. Bring on the stimulus.

What's really happening is that the supply-siders and Euro-austerity bugs who got us into this mess are trying to win through negotiation what they lost in the election. And guess what - Democrats are on to the game. That's why nothing is happening. Nothing has to happen.

It's hysterical watching John Boehner prance about, claiming he's going to prevent taxes from going up January 1. Don't you get it - taxes are going up on everyone unless you do something. Spending is going down unless you do something. The fiscal cliff is what you wanted, what you voted for. This is all buyer's remorse.

Eric Parnell is shocked, shocked, that the total national debt has risen $5 trillion in the last five years. Why did that happen? Did President Obama walk into office with a healthy economy? Did he walk in with America at peace? With a cooperative political partner on the other side?

No. He walked into office with the economy collapsing, falling at a 9% annual rate, not the 4% rate he was given by the outgoing Administration. He also walked into a political environment where Republicans were devoted to only two goals - keeping the tax cuts and wars that were causing the deficit, and doing all they could to prevent a recovery under a Democratic President.

So we had the Recovery Act, which did in fact pile almost $1 trillion onto the debt. But the fiscal impact of that act has disappeared. What's left, in terms of driving the debt, are mainly the tax cuts and the war. What I wanna know from Peter G. Peterson, Rick Santelli, all the folks at CNBC, from Simpson and Bowles and all their friends at Fix the Debt, is how they plan to pay for the damned war they put on our credit card a decade ago.

Throw grandma from the train? Tell the poor to pound sand? They really think that's going to repay the $10 trillion (with interest) these two wars have cost the American people? Really? Really.

There is an economic reality to all this. Too much austerity, too fast, and we go back into recession, which puts off any effort to pay down the debt by any means we can devise, other than literally eating grandma (nor raw, cooked) and playing "Hunger Games" with those newly graduated from college.

But we don't have to deal with that this month. We can have Obama tax cuts, and a new round of stimulus, next year. That's what is probably going to happen, by the way, although it's likely the tax cuts on 98% of us continue, at least for a while.

But how does that fix the debt? It doesn't.

Fact is we put two wars on the credit card, and have to pay for them. My idea is to tax carbon, to tax fossil fuels. Get rid of all existing programs for renewable energy, and make the link to paying for the wars explicit, make it patriotic. It will take 10 years, but that's how long the wars lasted. We can do this. Ending the tax cuts, now or a little later, restores another piece of the balance. Anything else is along the margins.

When anyone asks me about the debt I have one question. "What's your plan for paying for the wars we put on the credit card and left there?" Whatever you felt about the last decade, whether you supported or opposed the policies of that decade, we're all responsible for the result.

What we need to rise above is our ignoring of that reality.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

In the wake of this week's Freeh Report, the unthinkable suddenly became thinkable.

The thought that a college president, or athletics director, might do hard time for not reporting a crime that happened 11 years ago, became very real. Adding to pressure to indict Graham Spanier is the fact that he is a sociologist, founding editor of the Journal of Family Issues. (The anger I feel just writing that last sentence is palpable.)

What does this have to do with banking? Well, the more I learn about the LIBOR scandal, the angrier I get. The dam protecting big bankers from jail time may be about to break, just as it is breaking over Spanier.

The Financial Times estimates $22 billion in fines might result from this scandal, but folks are beginning to understand this is not something money can fix.

This is not crazy liberal talk. American Banker suggested it July 3. Business Insider wrote it on Wednesday. Seven U.S. Senators demanded criminal charges yesterday.

But wait, you say. This is something that happened in the last decade. The crime Freeh wrote about happened in 2001.

But wait, you say. This was done by traders, not by the CEOs. Please, the traders on the phone are just the Mike McQuearys in this case, this would not have gone on had the bosses done their jobs.

But wait, you say. Everyone was doing it - we can't jail all of them? In the Penn State case, there's even a criminal case made against the late coach Joe Paterno. If we could jail Joe Paterno for failing to report on a heinous crime, why can't we jail Jamie Dimon, who has been CEO of JP Morgan Chase (JPM) since 2005? Why can't we jail Charles Prince, who headed Citicorp (C) at that time? Or Lloyd Blankfein of Goldman Sachs (GS)?

Actually that last is sort of facetious. The real big fish, the Joe Paterno in this scandal, would have to be Blankfein's predecessor. Hank Paulson was CEO when this manipulation apparently started, and he's also the Treasury Secretary who ran the 2008 bailout of "too big to fail" banks that followed the years of scandal.

Point is that alongside "too big to fail" we've created a second category - above the law. It has taken the most abominable horror to dump that principle in college athletics. Maybe LIBOR will create banking's Louis Freeh moment.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Deal flow is starting to increase, putting a bottom into stock values.

This weekend alone saw three deals announced.

• WellPoint (WLP) taking out AmeriGroup (AGP) for $4.9 billion, a 43% premium. This could be the first of many deals linking insurers to providers.
• Campbell Soup (CPB) buying privately-held Bolthouse Farms for $1.55 billion from Madison Dearborn. It's a long-rumored deal that's primarily defensive for Campbell, which needs to find new markets for fruits-and-vegetables.
• Thomson Reuters (TRI) paying $22/share for FX Alliance (FX), resulting in a 40% pop in shares. The agreement values the company at just under $625 million and is part of a longer term trend of consolidation in financial information.

None of these deals is entirely unexpected or, in some ways, unusual. But like the recently-announced IPO of Kayak they represent a return to financial normalcy, a look across the chasm of present crises to fairly normal and benign business conditions.

As such, they're bullish for the whole market, and the economy in general.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.