The Fiscal Cliff – just a thought (updated 31dec12)

George Rebane

…, and this is just for the record – no need to respond.  Congress at best will alleviate an immediate problem at hand, one that they themselves created.  Why did they create it?  Why, to finally address the runaway deficits and national debt that is taking us to the real fiscal cliff.  There is absolutely NO solution to that problem in what any of the parties are willing to do for this near-term charade.  The can is being kicked down the road big time as debt and deficits continue to increase for out years that disappear into the haze.

In any event, what will really happen is a big across the board tax increase – one that hits the middle class through the payroll tax increase (shhh! we’re not supposed mention that), and the other, the vaunted class warfare tax rate increase (that re-elected Obama) to up the taxes on everyone making more than $250K - or is it …?  Oh crap, who cares - among whom are legions of real job creators.  Whatever.

The real fiscal cliff?  That’s when the dollar collapses, the US effectively defaults on its debt and entitlement obligations (paying off in Monopoly money), and the world shifts to a hodgepodge of alternative reserve currencies for international commerce.  Our military will be reduced to coastal defense, and the biggest gun carriers in the land will be the FEMA Corps and Homeland Security focused on keeping Americans from getting at the throats of their government scumbags.

[31dec12 update]  This thoughtful Dilbert cartoon came from a reader.  It has appeared here before, but it is still very appropriate as we celebrate the new year - Happy 2013 everbody!

Comments

[Russ Steele]

All of the great civilizations that preceded us at some point over extended their economic, political and social structure. Hovering on the cusp of collapse they were pushed over the edge by a environmental disaster, (ice age, 100 year drought, 30 year flood, solar EMP, come to mind), or an uprising by the people who were over worked and over taxed who took to the streets, and brought down their elite leaders.

While we think that the current civilized world, as we know it is immune from these kinds of disaster, it is only our hubris that prevents us from seeing the real dangers. Governments here in the US and Europe have made retirement promises to million that they can never keep. This debt is unsustainable and has to collapse and it will. While we can struggle for a long time on the cusp by continually kicking the economic can down the road it cannot go on forever, and there will come a disaster that will trigger the collapse of our social structure and survival will become every person and family unit for themselves. Those prepared for hard times will have a chance for survival, though slim. But, a chance.

Historically our climate has been driven by cycles, some that overlap, bringing warmth and cold to the continents. During warm periods civilizations flourished and during cold periods they declined as millions starved. With more people on the earth now, we need more agricultural land now than any time in the past. Past cold periods shrank the growing seasons and the lands suitable for agriculture. If the historical cycles recorded in the ice cores are correct, we are due for some significant cooling, resulting in the reduction of tradition agricultural land over the next generation.

With the growing government debt, the less flexibility our leaders will have to deal with the growing climate related problems. At some point, they will refuse, or be unable, to act, and the downward death spiral will become evident, accelerating over time until the inevitable crash.

That is one slow scenario, but the trigger point could come much quicker if the sun decides to erupt and send a powerful CME our way and destroy our digital economy. George once did some calculations for me using his Bayesian statistical skills to gain some insight in to when the next super CME might arrive. The calculations base on past historical eruption, suggested that it might come during Solar Cycle 25. We are currently at the mid point of Solar Cycle 24.

The point is if we keep spending beyond our means and making promises to millions that cannot be kept, we are going to stretch our economic, political and social structure to the breaking point and it will only take an unpreventable disaster to send us on the downward spiral to following the Mayans, Romans, Greeks, Egyptians, the multiple China Dynasties into the history books.

Happy Fiscal Cliff Everyone.

[Bill Tozer]

Its beginning to look a lot like Greece or California. Dr. Rebane posed an excellent question. Why are we standing on the edge? Simple answer is so we can stick it to the man, the rich. All in the name of fairness. Nothing to do with 16 trillion in the the red, just getting them money grubbin' fancy pants to pay more and more.

A co-worker asked me what will happen to her son-in-law who is on unemployment. Upon finding out he has been on long term unemployment extensions, I told her come tomorrow he is cut off, kabut, out of here knucklehead. She asked if Obama could change that, I said "Nope. Its the law. Obama signed it into law." Its all in the name of fairness.

[Todd Juvinall]

Yep, that fairness stuff is overtaking America. The new definition foisted on our people is "you have it? I take it!". We are on our way to a fiscal revolution!

[Bob Hobert]

Some thoughts and questions for a cataclysmic coronal mass ejection or EMP event:

Almost nothing we use every day will operate. Water will still run downhill. Wood will still burn. Heating systems without electronics will operate only until fuel stores are used up. No fuel deliveries. No electrical power, no TV, computers or radio. No access to money from banks or electronic sources like ATMs. Those with cash or bullion may be able to buy goods until stores run empty in just a few days. Delivery trucks and autos will not run if their electronics are defeated. Some older vehicles may run until their gas tanks run dry - will my'64 VW run? Where are we going to go, anyway? How long should we plan to provision for while awaiting recovery? How long before chaos and anarchy? How will you protect your personal stockpile? Who will survive? Sorry - I don't have many answers.

[Michael Anderson]

Just went outside again this morning to check to see if the sky was falling. After reading the above posts I was sure I was going to see volcanoes erupting, meteors plunging to earth, the forests burning indiscriminately, and hordes of angry poor people storming my house with guns blazing.

All I found was a sleepy cat, warm sun, blue sky, and the faint beginnings of spring. I sat with my cup of coffee on the retaining wall and thanked providence for my good fortune.

[Todd Juvinall]

Check Wednesday, the balance in your checking may be different. LOL!

[George Rebane]

Re BobH's 827am - what Bob describes is what has come to be known as a Black Swan.
http://rebaneruminations.typepad.com/rebanes_ruminations/2008/10/ruminations-13o.html

The BS is an unpredicted event of some catastrophic magnitude; it comes in many flavors. But its common characteristic is that it could not be reliably predicted, yet looking backward, it is easy to discover the plausible causal beam that led to the BS.

When a Black Swan arrives the overwhelming fraction of the affected population are in the morally equivalent position of sitting sanguine on their retaining walls, sipping coffee, and counting their blessings. It's the nature of the beast, er, bird.

[n]

The BS is an unpredicted event of some catastrophic magnitude; it comes in many flavors. But its common characteristic is that it could not be reliably predicted, yet looking backward, it is easy to discover the plausible causal beam that led to the BS.
------

Actually, the Taleb notion is that the Black Swan has a story built after the fact that appears plausible...but is probably just seeing faces in clouds. Humans have a natural bias for attempting to build oversimple patterns in a search for causality.

LOL. I suppose that's why I don't pay much attention to forums like this, aside from pure entertainment value.

[George Rebane]

n 954am - Interesting comment; how is your "Actually, ..." contribution different from what I said in my 935am?

We hope to keep up the entertainment dimension of RR - a little something for everyone, no matter the loft of their perch. Thanks for the kind words.

[n]

The difference between:

it is easy to discover the plausible causal beam that led to the BS

vs.

it is easy to discover the plausible causal beam that led to the BS that is BS

[George Rebane]

n 1058am - I believe that my 'plausible' amply covers both contingencies. How intensely one chooses to embrace a plausible explanation is another matter.

[Michael Anderson]

George wrote: "When a Black Swan arrives the overwhelming fraction of the affected population are in the morally equivalent position of sitting sanguine on their retaining walls, sipping coffee, and counting their blessings."

Well, sanguine is sanguine, regardless of it's irrelevant "moral" foundation. Perhaps I'm sanguine because I have a large pile of gold buried in the ground; enough military-grade armaments to stop at least the local constabulary; and wood, rice, beans, and water to last 2 years minimum. None of the readers here have any way of knowing.

But thank you for at least recognizing my sanguinity. Just leave off the moral designation and you'll be on the right track.

[George Rebane]

MichaelA 1235pm - sorry Michael, I used "morally equivalent" in its standard meaning of being within the same value system, and not having to do with morality as practiced by believers of various hues. But I do wish you all the joy of your ample preparations.

[Michael Anderson]

George, thanks for clearing that up. Sorry for misunderstanding.

[Jesus Betterman]

Happy New Year, everybody. The real job creators are the consumers around the planet who have enough left of their wages after drugs, legal and illegal, food, shelter, medicine and education, to buy stuff.

[Account Deleted]

Great post Doug - we have, in a nut shell, the way out of our fiscal mess. Just print trillions of dollars and hand them out at Walmart. The money would come from Obama's "stash". Happy New Year, to one and all!

[Douglas Keachie]

I said nothing about doing any such thing? What are you grinding in that mill of yours? Here's last night: New Year's Eve in Nevada City can be seen at http://nevadacityceremonies.com/ If you don't see the shot I took there, message or text me at the number provided.

[Gregory]

Scott, Keach does have a blind spot there. His answer for California's budget woes was more cash for public employees and retirees so they'd pay more taxes, which has the same flaw as all perpetual motion machines.

The real job creators are everyone who produce more than they consume.

[Ryan Mount]

> which has the same flaw as all perpetual motion machines

OK. That's hilarious. To extend the metaphor a bit, if we just give the perpetual motion machine enough of a push start, it should last long enough to quit just in time when the people who kicked started it are dead. They're kids are on their own.

Wasn't it just a few generations ago that if someone called you a consumer, you'd get a punch in the nose? Maybe [today] if one over-consumes, say, Beanie-Babies or Extra Crispy KFC, we could inject them with the TB bacterium just to bring back some old-fashioned shame and moderation.

Drive thru[sic] attendant: Here is your 18 piece bucket of crispy chicken. I see you've been here 5 times this week.

Patron: Yes. I have.

Drive thru attendant: Oh, and please extend the arm you don't write with.

Patron: Why?

Drive thru attendant: Sir, Please. It's required by law. Please extend your arm.

[Patron extends left arm, Drive Thru attendant stabs it with a syringe, injecting the Mycobacterium tuberculosis into his arm]

Patron: Ow! What was that? I got that same thing last week after buying my 532nd Beanie Baby on eBay.

Drive Thru attendant: We like to call it "crowd control." Please pull forward.

[Account Deleted]

Doug - you said consumers. You didn't say anything about WORK or PRODUCTION. Please tell me about these consumers of yours. Does it matter where they get their money? I'm thinking of Pelosi telling us that unemployment benefits boost the economy. Was she correct?

[Michael Anderson]

Ryan, I can see that you are ready for the kiddos to head back to the schoolyard. Me too. No more KFC until further notice.

[Ryan Mount]

Michael.

Indeed I am. It's either that or I'm going to go all Abraham/Isaac on them.

[Joe Koyote]

this from the New Yorker Magazine.. Just shows you how important the fiscal cliff issue really is.

WASHINGTON —Howls of protest filled the halls of the U.S. Senate today as dozens of Senators expressed their outrage at having to work through the weekend to save the United States from financial Armageddon.
“We’re hearing a lot about the country plunging back into recession and millions of people being thrown out of work,” said Senate Minority Leader Mitch McConnell (R-Kentucky). “What we’re not hearing much about is how our Sunday is being completely and irrevocably ruined.”
Senator McConnell said that when President Obama called the Senate back to work on a budget deal this weekend, “At first I thought he was kidding. Not only have I never worked on a weekend, I’ve never met anyone who’s done such a damn fool thing.”
The Senate Minority Leader added that “if saving this country means working Saturday and Sunday, then I’m not sure this is a country worth saving.”
“Yes, I know that the fiscal cliff is a ticking time bomb that could destroy the U.S. economy for years to come and take the rest of the world with it,” he said. “I also know that Sunday is Week seventeen of the N.F.L. season and now I’m missing all my games.”
Mr. McConnell said that while “saving the nation may be important to be some people,” he worries that forcing the Senate to work on a weekend is setting a dangerous precedent.
“For years, people have run for Congress because they knew that serving here was synonymous with not working,” he said. “If that’s going to change all of a sudden, a lot of us are going to feel very betrayed.”

[Gregory]

11:53

It's unclear to me how many of the people quoting that piece of fiction by Andy Borowitz at the New Yorker blogs understand it was meant to be "humor".

[Steve Frisch]

I agree Greg, only someone of your outstanding intellect and clearly superior cognitive skills could detect satire. All others are dullards in your light.

[Todd Juvinall]

GregG, only the Frisch can judge, shame on you.

[Joe Koyote]

Satire is like myths and conspiracy theories.. there is always a little truth in there somewhere.

[Paul Emery]

It's the Repubs that have fallen off the cliff

Watching the Republican party implode is big fun. You can't make this sort of thing up. Obama is truly blessed to have such pathetic opposition. The Republican Senate is rushing to the middle at record speed and will never allow another Todd Akin or Richard Mourdock or bible thumper conservative run for office .

Christie is about ready to bail, the Pubbers are definitely eating their own. Obama continues to control the agenda since the Republicans don't have a clue. Norquest is sniveling and incoherent, Rove has disappeared and Romney (remember him) could care less and glad he's out of the picture.

Perhaps a Libertarian party will emerge from the wreckage.

[L]

Talk about nasty, sniveling and incoherent... L

[Michael Anderson]

I just can't help but pass these additional links along, a liberal stew sure to choke any conservatarian:

http://www.nytimes.com/2013/01/03/opinion/kristof-cheap-meth-cheap-guns-click-here.html?hp

http://www.nytimes.com/2013/01/02/opinion/my-last-day-in-congress.html?hp

http://www.nytimes.com/2013/01/03/opinion/how-to-get-a-new-assault-weapons-ban-through-congress.html?hp

http://www.nytimes.com/roomfordebate/2013/01/02/should-social-security-cuts-be-considered/no-need-to-cut-the-little-that-social-security-recipients-get

http://www.nytimes.com/roomfordebate/2013/01/02/should-social-security-cuts-be-considered/social-security-is-irrelevant-to-the-deficit

Michael A.

[Paul Emery]

L

Exactly what is incoherent about my 9:37 post? It was actually optimistic that the Pubbers demise may have a positive ending? (Libertarian upsurge)

[Gregory]

So Paul, what happened to the balanced $3 in cuts for every $1 in revenue that Obama campaigned on?

4:30 "Koyote" Thanks for making my point; there was no truth whatsoever in that NYT blog piece, just snark based on a cheap laugh line for those looking for a laugh line.

[Paul Emery]

Gregory 03 January 2013 at 12:19 PM

Talk is cheap, the price of action is colossal. I didn't vote for Obama so I'm not defending him. The real question is when is there going to be new leadership in Washington that is independent and courageous enough to make tough decisions. The Pubbers are irrelevant at this point and aren't even in the game so nothing will come from that side so, because of no relevant opposition that has public support, Obama can say and do whatever he wants while the Repubs fight amongst themselves.

[Gregory]

Did you vote for Obama the first time, Paul? If so, why the change?

There was enough public support for even a Romney to be within one hurricane away from the Presidency, so if I were you I'd not be so fast to discard the party that owns the Governorships and the House, especially now that Hillary is a bit tarnished and perhaps not the shoe-in for 2016.

One Democratic leaning pundit was heard recently to consider that coming out hard for new gun bans, and losing, could stall the Obama presidency during it's last 2 years of being able to do anything useful. And with the latest exchange between Reid and Boehner, it doesn't look like it will be an easy debt ceiling debate. For those who missed it, Reid called the Speaker a "dictator" and the Speaker responded, telling Reid, at the White House, to "Go f*ck yourself!".

Boehner's people have also indicated they won't be wasting effort trying to include Obama in negotiations in the future, it will be legislation the old fashioned way... get a sponsor to put it in a bill and see it move, if it moves.

[Paul Emery]

Gregory 03 January 2013 at 02:34 PM

The change? I no longer wish to support the two party system which is really a one fat turkey with two wings whose main purpose is to be a collection agency for special interest money. The palace scraps we are witnessing are just necessary theatrics to keep the media churning out silly crap while Rome burns.

[Robert Peppercorn]

Looking forward to talking with Dr. George tomorrow. Tonight, I will relax with my dentist friend at our local Shooter's Paradise target range and then out to dinner to share our frustrations about the sorry state of CA and the U.S.