We've Been Sailing with the Cargo full of Love and Devotion
The market continues in its new role of town crier, instead of seer of all things. This is an Oracle that only understands the parameters. In this case, the parameters are clear. If we go off this fiscal cliff, we all perish. Ironically, it's not the recession that comes with the draconian triggered by inaction, but the fact that our leaders let us down, once again. While President Obama has won the election, he could still lose the war - big time. It is my feeling that the President prefers to have a legacy that speaks to progressives for centuries. This would come at the expense of destroying centers of wealth.
The stock market has taken notice.
Beyond the fiscal cliff, there are so many new takes in place, or on the drawing board, that incentive for modest risk-taking is evaporating rapidly. Could it be enough to loot the rich, you know them, those robber barons raking in more than $250,000 a year, through Obamacare taxes and other schemes? A line was drawn in the sand a couple of weeks ago, so it would seem the administration isn't budging. Yet, John Boehner told Diane Sawyer he slept like a baby after conceding his cause was lost on Tuesday.
Rep Boehner had a larger percentage of votes in his election, but the White House carries the biggest stick. This gets me back to legacy. George Bush won a second term with more conviction than Barack Obama, yet squandered it on an issue close to his heart. When Bush weighed in on whether families of coma patients had the right to pull the plug, he became a lame duck two years sooner. The topic made him a greater hero to the right, but he was a lonely-looking man when that helicopter lifted him away from the White House.
The GOP is reloading, and those espresso drinkers in Manhattan can forget the notion that members of the tea party are going to go and hide, on the contrary. Going over the fiscal cliff will give them more life than ever. (And maybe this time around, they will stick to their origins as defenders of the Constitution and warriors against excessive debt instead of staying indoors to be politicians themselves.) It promises to be a real donnybrook. There is a bipartisan solution, but it cannot be gimmicks like massive defense spending cuts today and promised reforms to entitlement program years from now.
The trick has been used a couple times, and it is not going to work.
Right now the question is which ship will sink?
Will both parties prove their cargo of love doesn't include all Americans? Right now, the market's got the notion that neither is ready to rock the right boats. So this super tanker, known as the United States, can continue to sail, and even find former glory.
Dow Under Pressure
David Silver
The Dow has lost 434 points, or 3.3%, over the last two sessions, the biggest two-day decline in a year. Investors have been fretting about the looming "fiscal cliff" and its mix of tax increases and spending cuts if a budget deal isn't reached by year end. European markets were broadly lower, with the Stoxx Europe 600 down 0.7%, as uncertainty over the Greece and weak data out of France kept investors on the defensive. As much as the latest sell off seems to be a reaction to the election, I think a good deal of jitteriness is also a result Greece and the rest of Europe. It shouldn't come as a surprise that Greece continues to be in turmoil, or that the weakness in the rest of Europe is bringing Germany down, but apparently it was. Greece's next bailout payment was delayed, but honestly, I do not think the ECB will allow Greece to default and then be forced out of the European Union.