Approaching The Terminal Point

Tuesday, October 23, 2012
By Paul Martin

Monty Plerein
EconomicNoise.com
Oct 23 2012

Two events are racing at us — an important (possibly existential) election and a fiscal cliff.

The fiscal cliff is overrated. Under normal conditions politicians always raise the debt limit. After going through a political dance, they will do what they always do. Whether they actually comply with spending restrictions is another issue. Compounding the so-called fiscal cliff issue is the tenuous condition of the country’s finances. The fiscal cliff will not kill the country although the country is dying. Markets, at their choosing, will determine when they have had enough and terminate the charade.

The election outcome compounds the fiscal cliff problem, especially if the election is close. Imagine the Bush-Gore fiasco in Florida spread across multiple states. That could paralyze politics to the point that Congress is unable to act in their typically efficient manner (a joke for those not paying attention), requiring cutbacks in government services. Even under this condition, it is nearly certain that Congress will ensure spending continues. After all, that is what they live for, and neither party wants to be responsible for Social Security checks not going out.

While these are the crises getting attention in the media, they are child’s play compared to the real dangers. Kitco lists some of these issues:

The Rest…HERE

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