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The Supercommittee Will Fail And When It Does, Markets Will Crash
Investor Place ^ | 11/15/2011 | Jeff Reeves

Posted on 11/15/2011 6:47:08 AM PST by SeekAndFind

Partisan politics will make any meaningful deal difficult to reach.

The so-called Congressional supercommittee — a group of 12 politicians with the unenviable task of reaching a compromise on federal spending and our massive budget deficit — is running out of time.

And so are American consumers and investors hoping for a deal to bolster a struggling economy and prove the stock market rally is here to stay.

Only about a week is left for the group of six Republicans and six Democrats to craft a plan that will slash $1.2 trillion from the U.S. deficit during the next decade. If the debt committee can’t reach a compromise, deep and automatic cuts to Medicare and defense spending will trigger — which either individually or in tandem could be very damaging to an already ailing American economy.

For investors, the firing of these triggers certainly would spook Wall Street. Just look at the 500-point drop in the Dow after the U.S. credit downgrade for an example of how market-moving these kind of big-picture setbacks in Washington can be.

And as the Nov. 23 statutory deadline for the supercommittee approaches, Europe’s deepening debt problems only add to the pressure as investors are focused on politics even more than they are company balance sheets.

There is hope among the Capital Beltway crowd that the pressure-cooker of tense negotiations and high stakes will ultimately force both sides to realize the importance of a deal — even if it is a last-minute one. But the divisive nature of American politics makes most folks very skeptical.

And even if this group of 12 can reach a tenuous deal, there still is the very high hurdle of an up-or-down vote in Congress. The fallout of Election Day 2011 and a heated GOP presidential primary continues to show politicians are heavy on partisanship and light on compromise. That means even if the debt committee goes out on a limb with a pact that is unpopular to many Democrats and Republicans, the party base of either side could easily break that limb by trying to twist the debate more to the left or right to suit their respective bases.

To top it all off, any political agreement from Congress is just that — a political agreement. As a very insightful piece in The New York Times stated on Sunday, it’s not enough for voters and politicians to think they know what’s best. Those dealing in government debts hold a significant amount of power and will show how practical a solution truly is. As Alan Cowell wrote in the Times, “In Greece and Italy, as in Ireland and Portugal before them, unelected bond traders defined the destiny of elected leaders. By week’s end, the market jitters had spread to Spain and France.”

So in a nutshell, the supercommittee has to effectively solve the complicated problem of U.S. debt while catering to intransigent members of their political parties, overly emotional voters and risk-averse global financiers.

Is this all overly pessimistic? Maybe. But consider this: Congress itself thinks there is no way for the debt committee to succeed — and rather than deal with hard decisions or the harsh repercussions of inaction, Sens. John McCain and Lindsey Graham plan to introduce legislation to undo the Budget Control Act and let everyone off the hook.

Ideally this wouldn’t have to happen … but practically, it’s not a bad idea. After all, what’s worse: The automatic spending cuts, or validation that our do-nothing Congress has an utter lack of leadership?

America already has resigned itself to the latter.


TOPICS: Business/Economy; Culture/Society; Government; News/Current Events
KEYWORDS: beprepared; collapse; debt; dollarcollapse; getreadyhereitcomes; obamasdepression; prepperping; shtf; stockmarket; stocks; supercommittee; survivalping

1 posted on 11/15/2011 6:47:09 AM PST by SeekAndFind
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To: SeekAndFind

Everybody’s playing chicken. Look for a breakthrough at the last possible minute.


2 posted on 11/15/2011 6:53:21 AM PST by Genoa (Starve the beast.)
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To: SeekAndFind
It's a charade! These charlatans will draw out their "negotiations" until the last possible moment and then agree on a horrible "compromise" under the premise that they had to do something because time was running out.

Book it.
3 posted on 11/15/2011 6:53:21 AM PST by Cato in PA (The Herminator 2: Judgment Day 2012)
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To: Cato in PA

Tie! Same second!


4 posted on 11/15/2011 6:53:56 AM PST by Genoa (Starve the beast.)
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To: Genoa

LOL!


5 posted on 11/15/2011 6:58:13 AM PST by Cato in PA (The Herminator 2: Judgment Day 2012)
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To: SeekAndFind

If/when the Super Committee fails, guess who gets the blame.

Pubbies got out-snookered again. They hand the Dems another issue to use against them in next year’s election. Dems can blame sluggish/failing economics and stagnant job creation on them.

Newt was right with his assessment of the Super Committee: It was the dumbest idea to come out of Congress in a while.


6 posted on 11/15/2011 6:58:38 AM PST by TomGuy
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To: Genoa

At the last minute, they’lll move the goalpost...delay the decision and continue discussions until Christmas...then January. A re-run of the continuing resolutions.

PULL the damn plug already...


7 posted on 11/15/2011 6:58:38 AM PST by SueRae (I can see November 2012 from my HOUSE!!!!!!!!)
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To: Cato in PA
It's a charade! These charlatans will draw out their "negotiations" until the last possible moment and then agree on a horrible "compromise" under the premise that they had to do something because time was running out. Book it.

I've notice the Obama administration, through that idiot Leon Panetta have started the "crisis" drumbeat that if this super committee doesn't come up with a "deal" (a deal being, Republicans cave and agree to tax increases), that soldiers will be starving, war planes will be falling out of the sky and ships will be rusting in port. I fear that these scare tactics will peal off enough Republicans to get some turd sandwich deal that includes tax increases.

8 posted on 11/15/2011 7:02:25 AM PST by apillar
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To: SeekAndFind
Only about a week is left for the group of six Republicans and six Democrats to craft a plan that will slash $1.2 trillion from the U.S. deficit during the next decade.

One small problem. There is no such thing as a ten year budget. I call B.S.

9 posted on 11/15/2011 7:03:03 AM PST by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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To: Kartographer

Prepper Ping is in order.


10 posted on 11/15/2011 7:04:07 AM PST by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: SeekAndFind

One way or the other, the result will be better economically (disregarding all other factors) for America than right now.

Markets should be neutral on this. I would think.


11 posted on 11/15/2011 7:04:45 AM PST by Cringing Negativism Network (Evict the unsanitary, violent occupiers. Now.)
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To: All

$1.2 trillion over a decade???? I must have been sleeping, I thought we were accumulating an annual debt of $1.5 trillion PER YEAR!!!!!

We’re toast....


12 posted on 11/15/2011 7:05:50 AM PST by Maringa
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To: Maringa

To myself...so at the end of ten years (and if our spending/revenue remains the same - which it won’t!!!) we’ll accumulate an additional $13.8 trillion on top of our existing $15 trillion? ~$30 trillion in debt by 2022???


13 posted on 11/15/2011 7:08:04 AM PST by Maringa
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To: SeekAndFind

More doom and gloom? That is all some here see.


14 posted on 11/15/2011 7:08:59 AM PST by BunnySlippers (I LOVE BULL MARKETS . . .)
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To: SeekAndFind

It was always going to fail. I pray to God it fails because its unconstitutional. Everybody should be calling their US congressman who voted for it and raise sand. I did it in a townhall.

We don’t sent 435 of these jerkwads up there to Capital hill to represent us so they can cede their power to 12 other jerkwads 6 of which are senators and shouldn’t be sitting on a committee to originate financial legislataion anyway.


15 posted on 11/15/2011 7:09:20 AM PST by Georgia Girl 2 (The only purpose of a pistol is to fight your way back to the rifle you should never have dropped.)
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To: BunnySlippers

When the debt obligation exceeds 20 times the total money in existance, what do you propose will stop such gloom and doom from coming to pass?


16 posted on 11/15/2011 7:10:45 AM PST by MrB (The difference between a Humanist and a Satanist - the latter knows whom he's working for)
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To: SeekAndFind

So in a nutshell, the supercommittee has to effectively solve the complicated problem of U.S. debt while catering to intransigent members of their political parties, overly emotional voters and risk-averse global financiers.


Overly Emotional Voters, eh? They don’t pay attention to us anyway. Why should they? Between vote buying and Voter Fraud they don’t need to. The honest and working citizens of the United States are the beasts of burden that they can continue to pile on until we are no longer able to work or are deceased.


17 posted on 11/15/2011 7:19:55 AM PST by The Working Man (The mantra for BO's reign...."No Child Left a Dime")
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To: SeekAndFind

If by “fail” they mean “succeed as planned by the ‘rats”, then yes. Dem’s will be tripping over themselves racing to the media to blame the “failure” on Republicans.


18 posted on 11/15/2011 7:33:41 AM PST by PogySailor (Obama is a SCOAMF)
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To: Texas Eagle

They aren’t going to reduce current spending. Instead they are going to reduce the rate of future spending growth.

They’re job is simple ... overestimate the projected spending growth for defense and entitlements, and then ‘cut’ the growth rate to what it really was going to be. That was easy!!


19 posted on 11/15/2011 7:42:05 AM PST by ChiefJayStrongbow
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To: PogySailor
What does it matter. If they get a deal we are still growing the debt at unsustainable levels.

The trick is the Fed is covering up the problem with little debt service.

If interest rates ever are allowed to be where they should be then we are Greece.

20 posted on 11/15/2011 7:43:38 AM PST by scooby321
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To: SeekAndFind

Congressional supercommittee will fail because Obama wants it to fail - both Zero and the MSM have been hammering away that it is “the Republicans fault” for not reaching an agreement - there was never going to be an agreement from the get-go.


21 posted on 11/15/2011 7:44:59 AM PST by Psalm 73 ("Gentlemen, you can't fight in here - this is the War Room".)
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To: Maringa
To myself...so at the end of ten years (and if our spending/revenue remains the same - which it won’t!!!) we’ll accumulate an additional $13.8 trillion on top of our existing $15 trillion? ~$30 trillion in debt by 2022???

Are you starting to see why so many Christian businessmen go to bed each night with this final prayer "Lord, this would be a good night to rapture us."

Here it is the middle of November and I still have no idea what next years taxes,health care, and fuel cost are going to be. I don't even know if our Vermont land will even be part of the United States next year.

22 posted on 11/15/2011 7:58:48 AM PST by JakeS (I have never had a flu shot and I have never had the flu.)
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To: SeekAndFind

Looks to me like we’re gonna get screwed again........

The Coming GOP Crack-Up Over the Toomey-Hensarling Tax Hikes

snip:
His plan equates to $1.50 of cuts for every $1 of new revenue, he said. It’s a huge concession for Republicans, he said, considering the bipartisan National Commission on Fiscal Responsibility and Reform had recommended $3 in cuts for each $1 of new revenue.

http://www.hughhewitt.com/blog/


23 posted on 11/15/2011 8:04:41 AM PST by BubbaJunebug
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To: appalachian_dweller; OldPossum; DuncanWaring; VirginiaMom; CodeToad; goosie; kalee; ...

Prepper Ping!


24 posted on 11/15/2011 8:06:04 AM PST by Kartographer (".. we mutually pledge to each other our lives, our fortunes, and our sacred honor.")
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To: SeekAndFind
And so are American consumers and investors hoping for a deal to bolster a struggling economy and prove the stock market rally is here to stay.

Why? The committee will only waste more of our tax dollars and line their own pockets. This American consumer is hoping they'll shut the government down for the next 14 months.

25 posted on 11/15/2011 8:16:10 AM PST by bgill (The Obama administration is staging a coup. Wake up, America, before it's too late.)
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To: Texas Eagle

One small problem. There is no such thing as a ten year budget. I call B.S.

Exactly ... Its B.S. !!

The Dumbocrats when they controll the Congress and can’t pass a budget in 3 years , and then they ‘invent’ a ‘ten year budget’.

Nothing to see here ... move along !
Ignore the man behind the curtain !


26 posted on 11/15/2011 8:57:27 AM PST by Tilted Irish Kilt ( (The Obama Adminstration: 2nd wave of attacks on America after 9/11) by GlockThe Vote)
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To: SeekAndFind
The Super-committee is Illegal and Unconstitutional to begin with. Also it was doomed to fail from day one.
There is not now or was there to begin with any Political Leadership or Will to deal with the Debt and Deficit problems.
The Day of Reckoning draws even closer.
27 posted on 11/15/2011 9:03:41 AM PST by Captain Peter Blood
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To: Maringa
BTW, there are right at 100 million taxpayers. So, to make these numbers more personal consider every trillion to represent $10,000 from each taxpayer in your household.

Also, since in reality there are close to 80 million taxpayers in the US that number should be bumped up to maybe $13,000 per taxpayer to cover every trillion dollars of debt.

If you have two taxpayers in your household, when the US debt hits 15 trillion your household's part of that will be right at $390,000 (2 x $13,000 x 15).

That's some pretty hefty extortion we're paying! That's like taking on the mortgage for some other family that's living in a *really* nice home! (Without so much as a 'thank you')

28 posted on 11/15/2011 9:18:58 AM PST by The Duke
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To: BubbaJunebug

what happened to Toomey being a “tea party” guy?


29 posted on 11/15/2011 9:31:16 AM PST by WOBBLY BOB (See ya later, debt inflator ! Gone in 4 (2012))
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To: BunnySlippers

Please, share your happy thoughts!

We can’t cut less than $120 billion per year out of a budget that’s $3.6 trillion now and expected to grow to over $5 trillion in the next ten years due to baseline budgeting, and you have happy thoughts!!!!!

Heck! If we just returned to zero based budgeting and had a spending freeze for ten years, it would save us $9.8 trillion in spending.

WHAT is wrong with our “leaders”?


30 posted on 11/15/2011 10:03:00 AM PST by noprogs (Borders, Language, Culture....all should be preserved)
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To: WOBBLY BOB

Well Wob....it appears that we was wearing a “tea party” mask while running for office....once there we see the person behind the mask.

The more things change the more they remain the same... as they say


31 posted on 11/15/2011 11:24:09 AM PST by BubbaJunebug
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To: SeekAndFind

Has it ever occured to ANY member of the GOP that the first rule of negotiating is to ask for twice what you expect/ That way when you agree on what you wanted in the first place, you have come across as accomodating.


32 posted on 11/15/2011 12:30:17 PM PST by NTHockey (Rules of engagement #1: Take no prisoners)
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To: Psalm 73

“Congressional supercommittee will fail because Obama wants it to fail - both Zero and the MSM have been hammering away that it is “the Republicans fault” for not reaching an agreement - there was never going to be an agreement from the get-go.”

Worth repeating.

I, for one, would like to know why the Stupid Party never hammers away that it is “the Demonrats’ fault.”


33 posted on 11/15/2011 12:59:27 PM PST by dsc (Any attempt to move a government to the left is a crime against humanity.)
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To: Tilted Irish Kilt; ChiefJayStrongbow
Amen. The spending happens immediately. President Clouseau gets to "spread the wealth" to his Leftist Union Thug cronies who turn around and use Union dues to fund The RAT Party. And the spending cuts? Never happen.

It's like Groundhog's Day. The same damn thing over and over again.

34 posted on 11/16/2011 6:24:57 AM PST by Texas Eagle (If it wasn't for double-standards, Liberals would have no standards at all -- Texas Eagle)
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