Tag Archives: fiscal cliff

Fiscal Cliff: What Next?

3 Jan

Fiscal-cliffThe U.S. hit its statutorily mandated debt level ($16.4 trillion) three days ago. This means the Treasury Department will use a number of special measures to keep the books open. At most, this will buy a couple months. Talks should begin in earnest around Valentine’s Day. At stake: a possible governmental shutdown. Recall what happened the last time that lawmakers discussed the nation’s debt ceiling: a two-week period in August 2011, in which the nation’s credit rating was downgraded, raising borrowing costs, and the economy almost entered a double-dip recession. President Obama wants Republicans to quickly agree to increase the debt limit, Republicans want to use their acquiescence as a bargaining chip. Moody’s today said it would monitor what happens and didn’t rule out possibly downgrading U.S. debt: “This confluence of events adds uncertainty to the outcome of negotiations.” Prepare for a sequel of August 2011.

Fiscal-cliff deal passes Congress

2 Jan

indexWASHINGTON (MarketWatch) — After a day of wrangling, the House of Representatives voted Tuesday night to pass a bipartisan deal undoing the fiscal cliff of austerity measures, which began going into effect at the start of the year.

The final vote tally was 257 to 167. A majority of Republican House members opposed the bill, with a total of 151 Republicans and 16 Democrats voting against it.

Tax rates will rise to 39.6% from 35% currently on individual incomes of more than $400,000 and on couples’ incomes over $450,000.

Pentagon To “Temporarily” Fire 800,000 If No Cliff Deal

31 Dec

Fiscal CliffFrom the WSJ: “Mandatory federal spending cuts designed to be prohibitively drastic will become a reality on Wednesday if negotiators remain unable to reach an agreement to avert the reductions. Illustrating the gravity of the cuts, the Pentagon plans to notify 800,000 civilian employees that they could be forced to take several weeks of unpaid leave in 2013 if a deal isn’t struck, and other agencies are likely to follow suit. The cuts, which members of both parties have referred to as a “meat ax,” are the product of a hastily designed 2011 law that required $110 billion in annual spending reductions over nine years to reduce the deficit. Their severity, representing close to 10% of annually appropriated spending, was intended to force Democrats and Republicans to come together on a broader package of deficit-reduction measures, which would replace the cuts. That effort failed, raising the prospect of the cuts’ taking place.”

Congressional leaders to meet with President Obama tomorrow

28 Dec

Fiscal CliffBarack Obama will meet congressional leaders on Friday as members of the House of Representatives prepare to return to Washington for a last-ditch attempt to head off the year-end fiscal cliff budget crisis.

Republican speaker John Boehner said the House will reconvene on Sunday evening, with less than 30 hours until the US reaches the fiscal cliff deadline. Boehner warned politicians they may be working through next Friday – after the 31 December deadline – to reach a deal to avert massive tax hikes and spending cuts

With five days to reach a political solution, Nevada senator Reid said the deadline would probably be missed. “It looks like that’s where we’re headed”, he said on the Senate floor on Thursday. “The American people are waiting for the ball to drop, but it’s not going to be a good drop.”

Discussions are underway in the U.S., the source of rapid change of sentiment.

4 Dec

Stock markets have endured difficult assault vendors in this afternoon. The White House has rejected a proposal submitted by the Republican deficit reduction, involving tax increases of 800 billion dollars. Growing nervousness can lead to emotional reactions, easy to see in the last month of the year. In U.S. markets, industry, and especially banking had won due to expectations of tighter banking union in Europe. Trading Nasdaq 100 index suffered from contraction of Apple shares. Downward trends were driven by a negative recommendation but also the overall pessimistic view manager Pimco, the largest bond fund in the world.

However is not everything lost: President meets with governors of both parties to discern ways to reduce the deficit states. Steps towards a compromise would be welcomed by markets. WATCH LIVE president Obama .

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