What exactly is the fiscal cliff?
The term refers to a combination of forced cuts and tax increases worth more than $500 billion. The best-known parts are the expiration of the Bush-era tax cuts and the automatic across-the-board cuts to federal spending.
|fiscal cliff cuts|
Whether you like it or not, since 2008 the govt have their sneaky way of telling you they are shafting you. No matter if you are a trader or not, you will recognize some of the following terms ; FAT FINGER!, QUANTITATIVE EASING, CDO'S, BAILOUT! and now we have the word FISCAL CLIFF !
What a rose bud of vocabulary they choose to use. But again all they are doing is merely trying to smear the truth and tell use these terminologies to give things a sense of order, when behind the scenes they know about the nightmare coming to the US and its people. Its only a matter of time now.
Again we have to deal with a group of men, or shall we call them boys who could not even organize themselves out of a brown paper bag, and here they are pretending to actually care. Take a glimpse just for a minute at what Obama has done over the last few years! Nothing, and now we have the same president and same problems. You do not have to be Einstein to see that!
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fiscal cliff cuts this...... fiscal cliff cuts that ? but....
What happens if the parties can’t agree and we go over the fiscal cliff?
Well that is a pretty good question, and it could infact happen. But if it does, please do not be SHOCKED!
In the short term, probably not very much since the world will not end at the beginning of the new year. However, longer-term, the parties are flirting with another round of recession. Cuts in government spending, coupled with higher taxes that decrease consumers’ purchasing power, usually mean a drop in production and a loss of jobs.
The Congressional Budget Office has projected that the economy would contract 0.5% in 2013, with the biggest shrinkage in the first half of the year. The unemployment rate is projected to rise to 9.1% by the fourth quarter.
But forget unemployment for a minute, because the traders out there are waiting for some sort of news. Whether it is good or bad news we still do not know, right now the govt seems to be hanging everyone in limbo. I guess we all want to know just some sort of news, or even a hint about the outcome.
All the government are doing is using their keywords, and keeping everyone in the FEAR mentality, and it seems to be working. What I am here to say to you is that no matter what the outcome is, realise what they are doing and why. And do not become victim to their scare tactics or give in to the fear they seem to be spreading around using these specialized tactics.
I think we can look at the prices of the S&P right now (which seem to be holding) as a sign things might be more on the positive side or a positive resolution will eventuate regarding the fiscal cliff issues. But that is just a stab in the dark guess, many people have mixed opinions regarding this matter.
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