Fiscal Cliff

[superfrank]

Good interview: Jeff Gundlach On The Fiscal Cliff Circus
(and on fundamentals, bonds and stocks)
http://www.zerohedge.com/news/2012-12-1 ... rough-2013

we have a $3.6Tr spending going on at the Federal govt. and they're taking in $2.3Tr, so the shortfall is $1.3Tr

and they're arguing over whether the tax increases should bring in an extra $20Bn or $35Bn - a drop in the ocean.

[Euler]

I sense they are having ideological arguments.

[superfrank]

what they need is a reality check.

Bernanke thinks he can print forever but, as the guy points out, each round of QE is suffering from the law of diminishing returns.

[Euler]

I'm turning more to the Hayek solution of a quick sharp shock that allows everybody to hit the reset button.

[superfrank]

I'm turning more to the Hayek solution of a quick sharp shock that allows everybody to hit the reset button.

+1. if that had been the original response then we'd have had one hell of a recession and reset, but the system would have been cleansed, and we'd now have a chance of real recovery and they'd be investment opportunities everywhere.

it's not going to happen though, they'll keep on this road until the system blows up imho - they just can't accept that their beloved economic model (essentially just debt-fuelled consumption) is a busted flush.