The U.S. is heading off the fiscal cliff and uses the last few days to accelerate its pace. At least they want to make the fall and crash as enjoyable as possible. Most market participants around the globe are already aware that it is too late for any agreement and that the U.S. has no other outcome than to bungee jump without a cord.
In the final week before Christmas Speaker of the House of Representatives Boehner made the Obama White House an offer on taxes. Boehner and fellow Republicans would allow tax cuts for the One Percent to expire in return for heavy cuts in socialistic entitlement programs such as Medicaid and Medicare. Obama refused the offer for unknown reasons, other than the fact that he has no interest to reach across the aisle for an agreement.
Mr. Obama did mention it was a very positive development, but not enough for him and his administration to accept. This may have been his last chance to avoid the catastrophic events which will unfold after New Year’s Eve. A serious of tax hikes and spending cuts will throw the U.S. economy into a deep recession while the U.S. Dollar will spiral into free fall and the unemployment rate will soar well above 10% while borrowing costs will shoot through the roof and tax revenues will collapse.
Boehner’s offer carries extreme risk as Tea Party supported Republicans are against tax hikes for anyone and will fight to treat every citizen equal. This move is a step away from party principles and could alienate Boehner from his own party. Over the past few weeks Boehner has replaced Republicans who voiced support for tax hikes from committees. It is unclear why Boehner decided to jeopardize the unity against social warfare in the U.S.
Mr. Obama wants to increase the tax rate on Americans who earn over $250,000 as he claims they can afford it. He completely tramples over the constitution and wants to revoke freedom from selected Americans as he feels he has the right what they can afford and how they should live. This administration is completely ludicrous and his re-election marked a dark day for the entire country, sadly only one half of Americans were intelligent enough to realize that.
Some Republicans informed Mr. Obama that they would support an increase in tax rates for Americans who earn over $1,000,000 per year, an offer he refused to accept. Obama and his socialists refuse to cuts to Medicare and only insist on raising taxes with little or no spending cuts. All meeting on this matter have been extremely unproductive while the country already ran out of time.
Equity markets will be on edge this week, the last full trading week of 2012. The Santa Clause rally may be absent this year with a huge sell-off at the beginning of 2013. Equity markets have been extremely overstretched and a 30%+ correction is in the making. There will be no agreement on the fiscal cliff while the Treasury announced it has already reached its borrowing limit and unless it is raised is no longer able to borrow money in order to run the country.
The U.S. is weeks away from default which will ring in the Second Wave of the financial crisis and start 2013 with the ingredients for a prolonged global recession and isolated pockets of depression. Mr. Obama has played President long enough and someone has to pay the piper. Ho No No is what echoes through the White House, game over!