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Wednesday, January 2, 2013

All the Facts….

 

Okay, still confused about what the cliff deal means? Everyone is spinning this one way or the other, so if you just want the facts and the bottom line, who can you trust?  I have a place for you to get the Facts. The source of this information is impeccable, and ALL of the facts are spelled out in just 1,360 words.

Here’s the (Link), It will take you to this page at the White House:

 

wh

 

The White House presents the “facts” of this matter. But it leaves out a few facts that are, no doubt, inconvenient for the White House to fess up to. If the President’s men really wanted to be honest about the facts, they would have added a paragraph:

 

-A consequence of the tax agreement is to increase payroll taxes on 155m American workers by $125B. We know this hurts middle and low income workers and their families. We understand that this is a very big tax increase, and that it will knock at least 1% of 2013 GDP (and beyond). We’re sorry about this, it couldn’t be helped. Nancy Pelosi and Harry Reid insisted it be this way.

 

Now about this fact sheet. Just a few items on the list of “Achievements”  that stand out to me:

 

Strengthens our recovery next year by cutting taxes for the middle-class

 

This is twice wrong. Middle class taxes are going up $125b in 2013. And the consensus opinion is that the net effect of the tax deal is a drag on GDP of 1%.

 

Provides greater economic certainty for families and businesses

 

They gotta be kidding with this line. The tax deal leaves open the pesky questions of A) the debt limit, B) the sequestered amounts, C) cuts in entitlement spending, D) additional taxes and don’t forget E) the President needs another Continuing Resolution (CR) to keep the lights on. (No budget from the Prez means another CR is required)

Me? I’m crapping in my pants over that list. The market may be happy today, but what is in front of is much more troubling than what is behind us.

 

Cuts the deficit and reduces the debt as a share of the economy over the next five years

 

Compared to what?  The fact is the country just agreed to an additional $4t in debt. Here’s the picture of the debt profile that is the result of this deal. That ugly orange stuff is the additional debt the country signed up for with the tax deal. How do you call this progress?

 

cbo

 

I guess if you really want the facts on this deal, you better look elsewhere.

 

images

 

 

 

Comments

  1. You mean the president (and staff) isn’t being intellectually honest with us? Shocker

    These people (i.e. politicians at large) wouldn’t know how to tell the whole truth if their lives depended on it.

  2. The USD spiked down big when the news of the tax agreement came out … but then reversed up and closed near its high today. EUR and GBP both had good fundamental news out today (beating expectations), but EURUSD and GBPUSD finished way off of their highs. With the US and European stock markets up big (risk on is typically bearish for the USD) and with good EUR and GBP fundamental news, EURUSD and GBPUSD should have finished strong, but did not.

    Looking at the most recent Commitment of Traders report, EUR commercial positions are at -1 stdev from the 3 year mean, and GBP commercial positions are almost at -2 stdev. When extreme levels like this are met, the trend is typically near the end (so uptrend in EURUSD and GBPUSD since mid Nov is likely near an end).

    Technically there are some divergences on 4 hr charts as well. Overall, it looks to me like the USD can rally from here.

    Regards,
    DR FX

    • DR,

      The dx weekly has a nice h&S, looks like right shoulder has been built and objective would be back around 74…I see no reason for dollar to rise with so much theatre in congress for debt ceiling left to go…ratings agencies could spark a fall from here with just words….

  3. I love it! I’ve been sitting on a shoot load of money waiting for these idiots that run this country to destroy it so I can scoop up assets from the “uneducated” idiots that put this president back in office. I love it, I love it, I love it.

  4. Bruce,

    You are right. But you are wrong.

    You are wrong because if politicians speak of truth, then we are really living in a fantasy land. Did not happen. Not going to happen.

    The truth is that the country, I mean not just the politicians, but the people, agree big spending and big tax cut are good thing. If you think people, again not just politicians, are concerned about the deficit, you are wrong again. They don’t give a crap about the deficit. I doubt if the general American people understand what the problem is other than they want lower tax and more spending. They can’t even take care of their health.

    So expect the same drama repeat again. Mish explained what the Republicans will do, which I can not agree more:
    Republicans Prepare to Wave White Flag Again, This Time On Debt Ceiling; “Temporary, Partial, Non-Threats”
    Read more at http://globaleconomicanalysis.blogspot.com/#8pH7dCe5iyyMxWMx.99

    Bottom line, all these are bullish to the market. it is not a matter of I like it or not.

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  6. FACT is most Americans didn’t know they had a payroll tax cut in the first place, at least that is what my polling of my friends show, so they won’t know that it is back either. You under estimate how dumb and how little Americans pay attention to the tax matter details! Hell, there is FATCA happening around the world, with serious systemic risk issues, and it is still the ‘Worst Law most Americans know nothing about.”, so this little exclusion doesn’t surprise me.

  7. Love you shelley

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