Cliff’ … an Illusion or Reality?
Campaign for a Sound Dollar
by Charles Goyette: Trampled
We do get these
buzz phrases about the economy, dont we? A special jargon
of the financial press and the commentariat, shorthand expressions
intended to suggest the speaker has an especially intimate understanding
of economic events.
Chairman Ben Bernanke gave a little miracle-grow boost to the old
expression green shoots on 60 Minutes in 2009,
as he described signs of a recovery. And once he dropped the phrase,
Scott Pelley was right there to pick up on it.
see green shoots? Pelley asked.
I do see green shoots, allowed the chairman.
have been seeing things. That was over three years ago, but Depression-era
levels of unemployment persist, the latest numbers reveal that 46½
million Americans are on food stamps (up from 28 million at the
start of the recession), and 60 Minutes recently re-ran
a story about all the schoolchildren who are living in cars with
their families and brushing their teeth in the gas station at night
before they go to sleep in the parking lot.
the First Time Bernanke has Suffered Illusions!
In early 2007,
just when the mortgage meltdown was getting going, he said the subprime
housing market appeared to be contained.
Even more overused
than green shoots is the expression headwinds.
It is way past its trendy lifespan. But President Obama, seeking
to lower expectations for the economy before the election, recently
announced that Were going to have some continued headwinds
over the next several months.
metaphors for the economy spread like, well, wildfire. The latest,
unavoidable in the financial world, is fiscal cliff.
Is NO Illusion!
cliff is the expiration of the Bush tax cuts at year-end, just as
$110 billion in automatic defense and domestic spending cuts
part of the 2011 debt ceiling increase package kick in with
the New Year. About that time, the Federal statutory debt ceiling
of $16.3 trillion will be breached as well.
Of course you
cant expect to see these issues met in advance
its an election year. The Republican convention is under way,
and then next week its the Democrats turn to get together.
So you can expect the presidential campaign to crowd out everything
else until the election November 6. And then the parties start juggling
for political advantage for the next election cycle.
So the delays
and temporary measures that we have come to expect from legislators
will be the rule of the day, because all they will do is
tax cuts for a short period. Kick the can down the road on spending
cuts. Roll out all the old accounting gimmicks weve seen before
to put off reality as long as possible when the debt ceiling is
breached. Patch together temporary extensions in the debt ceiling
as the debates and standstills continue.
It is true
that the so-called fiscal cliff is the convergence of
a lot of things at the same time. But dont for a minute think
that Washington can do anything to keep us from going over the economic
edge and plunging into the abyss below.
have already gone over the cliff. One simple metric makes it clear
the government released the gross domestic product numbers for the
second quarter of 2012. The part of the story that didnt make
the evening news is this: The federal government added $2.33 in
debt for every $1 increase in GDP.
of debt have long since blown away the green shoots of growth. We
dont have to wait for the end of the year. We have already
gone over the fiscal cliff.
But that doesnt
mean all hope is lost. Join us at the Sound Dollar Campaign in our
effort to bring common sense back to Washington and take back Americas
future! Its free, and it will only take a few moments of your
here to join.
Campaign for a Sound Dollar.
© 2012 Charles Goyette
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