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Thread: Fiscal Cliff, the theater is over

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    Default Fiscal Cliff, the theater is over

    A deal has been reached on the fiscal cliff.
    The ball in Times Square has dropped, 2013 is here and, technically, so is the "fiscal cliff", as Congress has yet to officially pass a plan to avert the scheduled spending cuts and tax hikes. But before panic sets in, although lawmakers failed to meet the midnight deadline, a deal is in place and the first step to making it official -- Senate passage -- is in the books. The Senate voted 89-8 in favor of the bill in the wee hours of New Year's Day, sending the deal along to the House, which must pass the measure in order for the "cliff" to be averted.

    The House is expected to vote on the deal as early as today, but given tepid signals from House Republican leaders, the vote there will be an interesting one to watch.

    "The House will honor its commitment to consider the Senate agreement if it is passed," the leaders, which included House Speaker John Boehner, said in a statement after the agreement was announced last night. "Decisions about whether the House will seek to accept or promptly amend the measure will not be made until House members -- and the American people -- have been able to review the legislation."

    Biden advises not to predict outcome of "cliff" deal

    Vice President Joe Biden, who traveled to Capitol Hill to brief Senate Democrats on the details of the deal, briefly spoke to reporters, warning that there's no predicting what the House will do.

    "Being in the Senate as long as I have, there's two things you shouldn't do: you shouldn't predict how the Senate will vote - you won't make a lot of money - and number two, you surely shouldn't predict how the House is going to vote. I feel very, very good. I think we'll have a good vote tonight, but Happy New Year," said Biden.

    As the deal was not signed into law before midnight, the country has technically gone over the "cliff". However, unless the deal fails to clear Congress, any detrimental economic impact will be avoided, as language will likely be added to the final legislation that would make the agreement retroactive to midnight Jan. 1.

    Here are the known details of the deal:

    Tax rates: Current tax rates will be extended for all wage earners making below $400,000 and couples making below $450,000.

    This was a key concession for both Republicans and Democrats. Democrats wanted the threshold for tax increases to rest at $250,000 and Republicans didn't want marginal tax rates to increase for anyone.

    The estate tax: It was set to increase from rom 35 percent to 55 percent in 2013. Instead, the compromise sets the new rate at 40 percent with the first $5 million worth of property exempt from being taxed.

    Capital gains tax: Capital gains and dividend tax rates will increase from 15 to 20 percent.

    Alternative Minimum Tax: A permanent fix to the tax that would hit middle class families

    "Doc Fix": Doctors will be shielded from a massive reimbursement gap for treating Medicare patients.

    Unemployment benefits: Unemployed workers will receive their benefits which expired over the weekend.

    Renewable energy tax credit: The tax credit for renewable energy companies will be extended for another year.

    While the extension of unemployment benefits and the Medicare "doc fix" cost money, and revenue will be lost due to a fix in the Alternative Minimum Tax, the package will still increase the federal government's receipts. The total package will add $600 billion to federal coffers.

    Also included in the deal is an unrelated provision but one that would have impacted Americans' pocketbooks. According to Senate Agriculture Committee chairman Debbie Stabenow, D-Mich., negotiators agreed to a nine-month partial extension of the farm bill. The legislation, which dictates subsidies to crop and commodity growers, was also set to expire at midnight, and the impact was likely to cause milk prices to rise to $7 or $8 a gallon.

    What has been left out of the "cliff" deal:

    The sequester: The $110 billion worth of automatic spending cuts under the sequester will be delayed for two months. The cost of continuing current federal spending levels will be offset by revenue increases and some spending cuts. In two months, the delayed spending cuts will kick in half will come from defense and half from non-defense accounts.

    The two-month window is to allow Congress and the White House to come up with a larger deal on spending cuts, leading to another (though smaller) "fiscal cliff." Democrats see this deal as a victory because Republicans had objected to using any new tax revenue to offset the loss of sequester spending cuts, reports Garrett.

    Payroll tax extension: payroll taxes will increase by 2 percent for all wage earners. This was passed and extended by Congress to give taxpayers additional relief during the slow economic recovery.

    Debt limit: The country reached its debt ceiling today, according to a latest estimate by Treasury Secretary Timothy Geithner, but because of maneuvering and shuffling the nation's balance books, bills can be paid for another two months. Another debt ceiling fight is poised to happen around the same time the new sequester is expected to kick in.

    Emphasizing the importance of deficit reduction to his fellow Republicans, Senate Minority Leader Mitch McConnell, R-Ky., the GOP's lead negotiator, urged his colleagues not to hold up a deal because budget cuts have not been addressed. Earlier in the day he called the tax portion of the "fiscal cliff" the most important component and said, "Let's take what's been agreed to and get moving."
    Ok first thing, what tricks is Timothy Geithner doing with the nations balance books? They call it "Maneuvering and shuffling" the books. Does it even follow GAAP regulations? We will never know because our drunken debt fueled government will never tell us.

    Anyhow, so they raised taxes and and raised spending. They took more money out of the peoples pockets and gave them more debt in return. Predictable Keynesian logic.

    "Fiscal cliffs" are not going away. None of this mess is going to go away, it is only going to become more abundant as it progressively gets worse. My question is how much longer will it last? Will the collapse come from us electing the first fiscally conservative person in decades to office and he decides to put a stop to this machine that the current admin keeps fueling or will the Progressives/Keynesians push this show as far as they can until dollar looses the prestige of being the world reserve currency? It is hard to tell but any American who doesn't absolutely understand that if the dollar looses it's prestige, that it will cause them to be wrecked financially, they are about to get blindsided hard.

    You know, if you read back on the things that I have been writing about, particularly about specific detailed economic events, I have been calling out predictions for some time. One after another I've been nailing these events while people scoffed at me. I personally think that anyone can figure this out, they just have to screw their head on. It is not nearly as complicated as people think that it is.

    A few moves that I would recommend making after hearing this breaking news:

    -This is obvious and I feel like I am beating a dead horse but make sure that you abandon your 401k by March when the White House and Senate have to "come up with a larger deal on spending cuts". That is your only guaranteed window that you have to pull out of it and invest your funds in other areas. You are lucky that you squeezed by this "cliff". If you play the stupid safe route by keeping your 401k, you will loose most of it eventually.

    -Sell your silver soon. If you own, I would make sure that you sell it before the collapse because the knee-jerk reaction of that event will dramatically lower the price of silver when Asia stops purchasing as much as they currently are. If you didn't know, one of the main drivers of the price of silver is that it is used as an industrial metal to make consumer electronics. When the sales of TVs, cell phones and other electronics dive, so will Asia's purchases of silver. It will cause a temporary crash in price. When you think that the price bottoms out, that is exactly when you should buy back. Big money is to be made with this one.

    -Finally I would wait six or seven months, and then buy food futures. There are uncertainties in regards farm subsidies coming up several months from now. Like everything else, it depends on how long they drag this out.

    Will I be correct? We will find out, that is the fun part. We live in a crazy time right now, good money is to be made if you play your cards right. Whether people like it or not, in these crazy times credibility is on the table big time (progressives, Keynesians, people who get involved in political discussions but know absolutely nothing about economics) as well. This is make or break. By not speaking up about the obvious, people are demonstrating their lack of understanding of very predicable economic events. I have however noticed that the normal crew of liberal (and Canadian) economic "experts" that I used to constantly run into have been eerily quiet for several months now. Maybe they can no longer deny what is going on so they are refraining from the conversation because they do not want to further diminish their reputation which they have already ruined by supporting this absurd system that we live in? Who knows anymore lol... I sure don't.

    Hope you enjoyed your dose of conspiratorial extremist nonsense haha.
    Last edited by Time Warner; 01-01-2013 at 02:00 PM.

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    Senior Member Baphomet3's Avatar
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    Quote Originally Posted by Time Warner View Post
    Will I be correct? We will find out, that is the fun part. We live in a crazy time right now, good money is to be made if you play your cards right. Whether people like it or not, in these crazy times credibility is on the table big time (progressives, Keynesians, people who get involved in political discussions but know absolutely nothing about economics) as well. This is make or break. By not speaking up about the obvious, people are demonstrating their lack of understanding of very predicable economic events. I have however noticed that the normal crew of liberal (and Canadian) economic "experts" that I used to constantly run into have been eerily quiet for several months now. Maybe they can no longer deny what is going on so they are refraining from the conversation because they do not want to further diminish their reputation which they have already ruined by supporting this absurd system that we live in? Who knows anymore lol... I sure don't.

    Hope you enjoyed your dose of conspiratorial extremist nonsense haha.
    Maybe it's because most of us remember our childhood fairy tails, and learned the lesson of Chicken Little...

  4. #4

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    All I noticed in that deal was "more extended benefits for the unemployed"...

    Have to admit..inside I cried a little. Giving people more time to sit around doing nothing and extending the credit card theory of government just sickens me...
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    Quote Originally Posted by someguy View Post
    Maybe it's because most of us remember our childhood fairy tails, and learned the lesson of Chicken Little...
    If you don't mind me asking, can you explain that lesson and explain how it is relevant to the current economic conditions with liberals supporting this system?

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    It is ok if you don't believe what is happening. I am not in the business of trying to convince people otherwise, I'd rather further educate people who are already aware. Our current situation is not about simply reading an article, it is about having an aptitude of economic and financial knowledge. Those who have that, see what is coming from a mile away. Those who don't, scoff. There really is no debate otherwise.

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    Senior Member Baphomet3's Avatar
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    Quote Originally Posted by (v2)ROVPitViper View Post
    All I noticed in that deal was "more extended benefits for the unemployed"...

    Have to admit..inside I cried a little. Giving people more time to sit around doing nothing and extending the credit card theory of government just sickens me...
    It's more about what you (me, we) didn't notice. The whole Fiscal Cliff debate was that the dems wanted the rich to eat shit and die in a blaze of class warfare and division . . . er, I mean, provide more "revenues", and the reps wanted the government to cut more spending. ONE of those things happened.

    So, in this great compromise, how did big government compromise? What suggests to ANYONE that this will do ANYTHING to address the deficit, let alone the debt?

    The government, which spends WAY, WAY, WAY too much, does too much, is too big, intrusive, violent, and global, now gets slightly more of your paycheck if you make serious bank. So? That's a . . . win? For fucking WHO?

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    Quote Originally Posted by Time Warner View Post
    It is ok if you don't believe what is happening. I am not in the business of trying to convince people otherwise, I'd rather further educate people who are already aware. Our current situation is not about simply reading an article, it is about having an aptitude of economic and financial knowledge. Those who have that, see what is coming from a mile away. Those who don't, scoff. There really is no debate otherwise.
    I actually run my own, quite successful, business and have a reasonable knowledge of economic and financial issues. My response wasn't in response to the mess your government is in. I agree with the general sentiment that government largely has their heads up their asses. My response was aimed more at the doomsday scenarios that you and others are constantly painting. I have no doubt a correction is likely coming (and that is probably a good thing)but if history has taught us anything it is that we are pretty resilient. Your society is not going to suddenly implode.
    This is the same reason I find Garths vivid predictions of gulag style death camps rather tiresome.

  9. #9

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    Quote Originally Posted by someguy View Post
    I actually run my own, quite successful, business and have a reasonable knowledge of economic and financial issues. My response wasn't in response to the mess your government is in. I agree with the general sentiment that government largely has their heads up their asses. My response was aimed more at the doomsday scenarios that you and others are constantly painting. I have no doubt a correction is likely coming (and that is probably a good thing)but if history has taught us anything it is that we are pretty resilient. Your society is not going to suddenly implode.
    This is the same reason I find Garths vivid predictions of gulag style death camps rather tiresome.
    Same here, we come from similar places. My only disagreement, which unfortunately is a very common theme that I've had chatting with you before, is when have I ever mentioned that society is suddenly going to implode? Of course the economy will implode, whether or not it will be sudden depends on the course of our monetary policy and fiscal policy. But in regards to society, I do not know what will or will not happen to society. Neither do you. It is impossible to tell, there are so many variables that I can mention. However, stating that the society is not going to suddenly implode is an affirmative statement, mind explaining where you get this insight from?

    Also, did you really compare my sentiments on the economy with theories of death camps? You have to stop doing that, it's to the point where it is becoming unpleasant to discuss things with you, even if we agree.

  10. #10

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    Please don't take this the wrong way but I get a sense that you have it all figured out in your mind (in a specific way). Like Ive said many times, how exactly things play out depends on the course of many factors but the direction is certain. When reading your comment I get an impression as if simply rule out very possible situations because it does not align with your frame of mind. I could be wrong but that is how you came off.

    See, you have absolutely nothing to back up the attitude that an economic or whatever doomsday scenario won't happen. You are speaking in a foolish tone. I am not telling you this to bash you, I am telling you this to help you. I will give you an example; imagine if Ron Paul got elected. His goal was to cut the DHS, the department of education, and most other major departments of government, he would have ended almost all military spending, most welfare spending, he would abolish social security and medicaid, he would have audited the federal reserve, the list goes on... Tens of millions of people would be out of jobs. Their entitlements would be servery cut. Our GDP would plummet like never seen before on such a grand scale. It would be very very crazy, a sudden total crash (although it is the best course for us to take looking into the long run). But you act as if this type of reality can not happen or better yet, that it will not happen. I can name dozens of situations that can cause these types of events. I do not know how the fall is going to feel, instead I predict what I think our elected officials will do and what the public opinion will allow happen. Based on that and other financial statistics, I break down all of the possible scenarios and use it guide my investment strategies. Without getting too deep into my personal life, I have made a career out of this type of analysis and I've seen guys like you come and go.

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