fiscal cliff

Insider

Off the Cuff: Irrational Exuberance

Partying like it's 1999 in 2013
Wednesday, January 2, 2013, 8:16 PM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • Market Euphoria
    • ​Stocks explode higher for irrational reasons
  • The Fiscal Cliff Fake-out
    • ​No spending cuts, no curbs on the rich
  • ​Japan: The Ticking Time Bomb
    • ​The leading candidate for currency collapse

Well, it's now 2013, and the stock market is partying like it's 1999. » Read more

Insider

The Fiscal Cliff Fiasco

A 'solution' that solves nothing
Monday, December 31, 2012, 11:18 PM

Well, as expected, some sort of a last minute, sausage-like deal was struck at the eleventh hour.  Well, actually, the twelfth hour, given that only the tax side of the equation was "solved," leaving $109 billion in immediate spending cuts still on the table.

Actually, it's even murkier than that.  The deal that was struck was a Senate deal and the House could do more, less, or even just scuttle the whole thing.  So let's call it a first step on the path to a deal. » Read more

Insider

Off the Cuff: Looking Back (and Ahead)

Chris' key takeaways for 2012 and beyond
Friday, December 28, 2012, 10:58 AM

In this week's Off the Cuff podcast, I stand in for Mish and ask Chris about:

  • The Fiscal Cliff Fake-Out
    • The "cliff" is actually one of our smaller problems
  • 2012's Legacy
    • Which 2012 development will have the biggest impact to our future?
  • The Peak Prosperity Message
    • And why larger audiences are beginning to awaken to it
  • What's in store for 2013 on PeakProsperity.com
    • New videos, contributors, functionality and events
Insider

What Will Happen When We Hit the Cliff

Few places for financial assets to find shelter
Wednesday, December 26, 2012, 2:52 PM

Executive Summary

  • A rising dollar would negatively impact stock market profits and valuations
  • Interest rates ultimately will rise, and that will be a game-changer
  • Investors will eventually realize that "risk-free" assets (e.g., U.S. Treasurys) are NOT safe havens
  • Why there will be few places for financial capital to find shelter in 2013

If you have not yet read Part I: The Structural Endgame of the Fiscal Cliff, available free to all readers, please click here to read it first.

In Part I, we covered the basics of wealth and political power in the U.S. and found that the Fiscal Cliff is only a symptom of a structural endgame in which the imbalance between what has been promised and what can be collected in taxes will continue growing until it triggers a financially driven political crisis that I believe will inevitably become a full-blown Constitutional crisis.

Though there are many facets of this long-term political crisis that are worthy of further exploration, we will to start with three financial aspects that could start impacting households in 2013: a rise in interest rates and a resultant destruction of bond valuations, a rise in the U.S. dollar that negatively impacts U.S. corporate profits and thus stock market valuations, and a reduction in upper-income households’ spending as a result of higher taxes that depress discretionary consumer spending.

A Rising Dollar Negatively Impacts Stock Market Profits and Valuations

Let’s start with a topic that I have covered in depth over the past year, the structural reasons behind the rise of the U.S. dollar (USD).  The recurring fantasy that Europe’s fiscal and debt crises are “fixed” and the Federal Reserve’s money-printing/Treasury bond purchases have recently depressed the USD, but in the longer term, the USD has been tracing out an unmistakably bullish pattern of higher highs and higher lows since May 2011... » Read more

Blog

The Structural Endgame of the Fiscal Cliff

It's not just a temporary political event
Wednesday, December 26, 2012, 2:51 PM

To understand this endgame, we need to start with the financial and political basics of wealth and power in the U.S.

1.  Wealth and thus political power are highly concentrated.  The dynamics of rising wealth disparity and the increasing concentration of wealth are debatable; the disparity is not.  Roughly 70% of all financial wealth is held by the top 5%; within this top layer of ownership, the top ½ of 1% hold an outsized share. » Read more

Insider

Off the Cuff: It Feels Like 2007 All Over Again

There's a bubble in "belief"
Thursday, December 20, 2012, 1:43 AM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • Fiscal cliff "smoke"
    • Not enough substance to include "mirrors"
  • The markets' grim outlook
    • Most difficult time for investors in generations
  • Crazy ideas
    • Could the Fed get away with taking all debts onto it books?
  • Media spin
    • There's a bubble in "belief"

48 hours to go and no Fiscal Cliff deal in sight. The recently touted "Plan B"... » Read more

Insider

Off the Cuff: We're in Danger of an Unwind of Everything

Sick economy + printing press = collapse risk
Wednesday, December 12, 2012, 9:07 PM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • QE4
    • NOT a sign of a 'recovering' economy
  • Asset overpricing
    • The liquidity flood is making nearly every asset class overvalued now
  • No exit
    • The Fed has no plan on how eventually to remove this liquidity from the market
  • Potential for a monster upward move in gold
    • It's relatively undervalued, and it's the only safe haven left
Insider

A Couple of Bad Ideas

Practical thinking remains in short supply
Sunday, December 9, 2012, 8:46 PM

This week a couple of very bad ideas were floated, one having to do with U.S. natural gas (NG) supply, and the other a proposal for how the U.S. president could avoid having to deal with the pesky debt ceiling.

Throughout the entire unfolding of the crisis, we have all been patiently waiting (if not agitating) for reality to gain a place at the table of ideas.  Instead, we still have the usual fare of the absurd and the ridiculous, indicating that we are not quite ready yet to entertain the serious business of negotiating the various predicaments that we face. » Read more

Podcast

Bob Fitzwilson: 2012 is the "Most Difficult Year Ever" for End-of-Year Financial Planning

Little time left to make big decisions
Saturday, December 8, 2012, 1:27 AM

"This is probably the most difficult end-of-year planning I have ever seen in my career"

~ veteran investment adviser Bob Fitzwilson

As the Fiscal Cliff looms ahead, as well as the implications of new legislation at both the Federal (e.g., "Obamacare") and state (e.g., California's Prop 30) levels, financial advisers are furiously working to calculate the impact these developments will have on their clients' net worth in 2013 and beyond.

Add to that the ugly macroeconomic environment of spiraling sovereign debts and deficits, currency devaluation, and underfunded entitlement programs. At this point, the prudent assumptions to make are that taxes will go higher over time, the money printing machines will run at maximum speed, and when the system really begins to collapse under its own unsustainability the rules will be changed. Perhaps that means capital controls; perhaps it means new restrictions on large asset pools like pension and retirement funds; perhaps it means wealth taxation. At this point, no one knows for sure.

No wonder this is such a difficult moment for end-of-year planning.

So, what to do? » Read more

Insider

Off the Cuff: Willful Blindness

Our leaders are ignoring signs of both success & abuse
Wednesday, December 5, 2012, 8:34 PM

In this week's Off the Cuff with Mish & Chris podcast, Mish and Chris discuss:

  • Willful Blindness of the Fiscal Cliff
    • Our politicians choose the wrong path despite models for success
  • Gold Manipulation
    • Price discovery is broken in today's markets. Patient bullion holders will be eventually rewarded.
  • America's Growing Demographics Problem
    • Fewer workers making fewer real products
  • Money Printing Forever
    • Why it's the surest bet