Skip to comments.Here's Goldman's Worst-Possible, Black-Sky Scenario For The Fiscal Cliff
Posted on 10/07/2012 4:43:18 PM PDT by blam
Here's Goldman's Worst-Possible, Black-Sky Scenario For The Fiscal Cliff
October 7, 2012
What's the worst possible thing that could happen when we hit the fiscal cliff?
Here's Goldman's Alec Phillips and Jan Hatzius going through some of the possibilities:
Under the baseline not so good scenario, fiscal policy would shave nearly 1½ percentage points from real GDP growth in early 2013, compared with ¾ points in 2012. In this case, we expect a renewed moderate GDP growth slowdown to a 1½% pace in early 2013.
Under the alternative bad scenario, the fiscal drag would rise to nearly 2 percentage points in early 2013. This bigger hit, combined with the possible greater uncertainty if an agreement proves elusive for a few weeks in early 2013, would probably cause a sharper slowdown in GDP growth to 1% or less.
Finally, there is the tail risk scenario that Congress fails to agree on any type of resolution for a more extended period, and the economy is hit with both the sequester and much bigger tax increases. While the impact of such a failureespecially those related to confidence and financial conditionsare harder to quantify, just the direct fiscal impact would imply a GDP growth hit of around 4 percentage points in early 2013, and likely a recession.
One other thing to note in regards to the fiscal cliff. There is a sense on Wall Street that the race for The White House has truly been reset after last week's debate. Romney is unquestionably back in this.(Idiots, Romney was never out of it.)
Any assumption about what DC will look like after November 6 is now called into question, and trying to wargame out the fiscal cliff has gotten a lot harder.
(Excerpt) Read more at businessinsider.com ...
It should be noted that Goldman is the problem. They have long been a creature of Government. Since 2008 they have ceased to be anything but rent seekers. If they and their kind vanished overnight it would be great blessing.
The resolution of the “fiscal cliff” tax situation should happen only once Republicans and conservatives are running both the Senate and the House and have the presidency in January 2013. The changes can be made to be effective retroactively to January 1, 2013.
The changes should NOT be made in the lame duck congress in December with Reid and the liberal Democrats in absolute control of the Senate and the anti-American Obama still in the Presidency. It can wait several more weeks and be done with clean hands with minimal liberal/progressive influence.
We definitely need to NOT ALLOW ourselves to be stampeded by the Democrats into doing it while they still would have a huge hand in determining what the solution will be.
Hope springs eternal.....
“....Argg!!! Tell when the build a jail cell to hold the likes of Jon Corzine and Timothy Geithner... all likely to be convicted, if someone with balls would charge them....”
Henry Paulson (former CEO Goldman) should join them. He was Bush’s Treasury Secretary during the 2008 crash. He should have let Goldman, Citi, and JP Morgan go the way of Bear Stearns and Lehman. Putting a gun to the head of the CEO of Bank of America and forcing it to buy Merrill Lynch at a premium was a criminal act. As was backing European banks during the crisis.
Maybe we should take our medicine.
Do you have any links or more information... not because I am challenging your assertions, but simply because I would like to read a bit more on this subject - I am uninformed on this subject more than I care to be...