America's Fiscal Cliff....is OUR problem....

10 November 2012

We are all too well aware of the problems for the world economy posed by the Eurozone.  This is a problem 'parked' for a while that has not gone away.  Attention now turns to the second massive problems for the world economy, the 'Fiscal Cliff' that the USA economy is heading straight for and is due to hit on the 1st January.

The problem here is a political one.

It arises because of political mechanisms used to get economic measures through going back as far as the Reagan years.  I will not go into any complex explanations but it is all to do with the relationship between the legislature and government, alongside the US constitution.  Economic measures were passed that were time limited and that time limit expires on the 1st January.

If a resolution of the problems cannot be agreed in time there will be massive tax rises in the USA that will stall the very weak jobless recovery in the USA.  It has the potential to throw the USA into another recession and the world alongside it.

This could be the price paid for the Obama presidency and, as a result, the markets have nosedived after the election.

Getting a resolution and agreement between the legislature and government in the USA is essential and the current brinkmanship must end.  Otherwise we could all suffer because of America's constitutional mess.

• howard mcsweeney1 wrote:
  i thought that their manufacturing base was going through a boom at present due to lower energy costs.
• Guest 710 wrote:
  The 'brinkmanship' is the game played by the markets against the Democratic will.
  Just what was Romney offering the voter that would have so pleased the markets?
  All that money spent arguing over who would increase employment when the 'honest' thing to do would have been to have posted the markets' ransom note upon the Ballot Paper. "Vote Mitt or else!"
  I note from the Bar Chart another instance of 'unhonesty', the last line could read, "$108,000 and up and up and up, and is the first line really saying, "From zero to $20,000"?
  Alongside the voting for the Presidency (and a great deal else) the composition of the Legislature has also been altered. Is the message above, "If only the Democrats had won a majority in the House..."?
• Guest 710 wrote:
  After reading Heidi Moore's take on this subject,
  http://www.guardian.co.uk/business/2012/nov/08/fiscal-cliff-winners-losers?INTCMP=SRCH
  I can see that the US is set to suffer in the same way we do here, here on this Blog and on this Forum.
  Anything is possible except a tax hike on those with the most. It seems that it is ONLY for Governments to 'save' in times of plenty and spend in the inevitable lean years. Those who profit from, and save in, times of 'plenty' MUST do so also in the lean years, not for them the trough and peak, peak upon peak only.
  I am beginning to know how the Romans of the Asterix the Gaul stories felt: Success everywhere, progress everywhere, peace everywhere...everywhere except that one small village. In that one House, in this case. One thing is for sure, money and wealth may come and go, but Politics endures.
• Guest 640 wrote:
  The markets did indeed fall after the re-election of Barack Obama. I think it was more directly to do with Europe rather than the American economy. The US economy has shown signs of growth and with the added increase in jobs is looking inreasonable condition. This was one of the plus points played up by Mr Obama during the last days of his campaign. The doubts are can it be sustained.
  
  The reason the markets falling was more to do with Europe than anything else was given in a clue yesterday by Andrew Neill on the Daily Politics.
  
  He said that Obama is not a friend of Europe and probably sees the UK as a backwater. He didnt originate from here..he has no roots here in Europe, so doesn't profess much alignment or sympathy with its current plight. He originates from Hawaii according to Neill, and his outlook is to the pacific and the emerging world rather than the old world across the atlantic. Coming from Hawaii I guess you can see the reason for it.
  
  Perhaps, and who can tell, perhaps this bodes ill for the struggling EU economy therefore the markets took a fall with little optimism on the immediate horizon. The EU's struggle has hit the globsl markets regularly and this was just more of the same
  
  Romney was offering the markets right wing conservatism, coupled with a strong and successful economic background, and something of vast business experience.
  The markets like one of their own. He would sing from the same songbook.
  
  Much the same way as it happens here. A Conservative win almost always sees the markets rise, a Labour win might see the markets rise somewhat, providing there wasnt too much leftwing-ism on the agenda
• Guest 725 wrote:
  I warned of all this ages ago and it was Barry who suggested that I was going over the top. Come on Barry catch up.
• Brian Dixon wrote:
  barry,i told you so,that the yanks where more dangerous than europe.i am glad that you have woken up to the fact.
• Guest 655 wrote:
  The difference is that this is a political impasse and is not an ill-conceived currency issue. Something has to give and it should be spending. Like the UK and much of the EU the USA needs to chop back their public spending to more sensible levels.
  
  The Republicans have the right priorities and Obama should give way.
  
  Philip - yes, you do go over the top....