America's Coming Austerity Nightmare

100 MPH down a hill, brakes not working, fiscal cliff ahead

Economists warn that the looming tax hikes, combined with $109 billion in automatic spending cuts scheduled to take effect in January, could throw the fragile economy back into recession if Washington doesn't act. The automatic spending cuts are coming due because of the failure of last year's deficit "supercommittee" to strike a bargain. The combination of the sharp tax hikes and spending cuts has been dubbed a "fiscal cliff."

"Could" throw the economy back into recession? That's grade 'A' bullcrap right there. The economy remains in recession, or at least the average American household is mired in the effects of the recession, regardless of what Wall Street is doing. Prices on necessities; medicine, food, clothing, energy, utilities, fuel, rent, etc are skyrocketing. Sallaries are either stagnant or in decline. Jobs are anything but robust. People are struggling to make ends meet... and here comes a supposedly unavoidable baseball bat straight to the back of the head. The average American is Ceasar from Rise of the Planet of the Apes. We've lived a sheltered life, expecting success and happiness, and we're about to be thrown into a cage alongside a world which has lived their life in the antithesis of our experiences, filled with uncertainty, violence, and disappointment. We're going to have to prove ourselves here... will we take the confinement, abuse, and neglect or will we forcibly extract ourselves from the cage and refuse to play the game anymore?

yea you're right, it's definitely still a depression. it seems that 2013 may be the year they have to start calling it like it is. you can't enter into collapse territory and not let the public know. they'll hang you before it's all over. so once the public is officially informed of what they already know deep down is true, kerplooey!!

I was thinking we still had a few years before it started to really kick off ( the collapse). Now I'm not so sure it won't start next year with all these waves of bad economic news rolling through lately.

It is going to be mind boggling at the number of dependent mindless people will be roaming around like zombies once they cannot log into their facebook/twitter/chatrooms any more.

What is going to do it is the Q-Infinity (QE3) bullcrap.

Me personally, I plan on riding that wave rather than being swept up in it. Buy a house cheap on the QE3 money, but buy a stable flat rate loan instead of some ARM (and later, a LEG). But there is no doubt, the crash is coming Ron was right, and continues to be right on the money issues. The only thing we're doing by letting the Fed continue to exist is to prolong the inevitable heavy crash.

Not to mention the longer the buildup the bigger the fall.
Remember jfk trying to axe the reserve? seen how that turned out.
These criminals wont go down without a fight.

The middle class are going to be hit the hardest by the crash.
the rich won`t notice much difference in their daily lives they have so much money and assets that they could still live comfortably even if 90% of their wealth was suddenly gone.
The poor are used to scrounging and scrapping by day to day week to week month to month,their daily lives won`t change much.
The day to day lives of the middle class are going to be affected the most,going from middle class to poverty virtually overnight is going to be hard for some people to adjust to.
I believe most of the rioting and looting will be done be these former middle class people who have had everything they have spent their entire lives working for suddenly stolen from them by TPTB.

I started seeing my jobs off-shored in 2002. waved goodbye to 3 before 2006. My wife and I both work full time (for peanuts compared to what we made between 87-2002,) run a side business, and attend school full time. We haven't been in on "vacation" in 5 years. Frankly -- the only way we are ever going to grow up as a nation is if the middle-class are no longer insulated from their bad political choices. If a downturn comes, it comes. I no longer have any fear of it.

But hold on, we just had some positive manufacturing news come out of the US along with some positive housing data showing an increase in building spending, marking the recovery of the housing sector. Now all the US needs is a politician to tell all the unemployed bums that the real reason they don’t have a job is because they are job snobs, like the previous conservative government of Australia did. Don’t youse just love the political right? They would have it that the only reason you are experiencing hardship is because you are lazy and good for nothing bludger. The US economy is going gangbusters! Profits and prosperity dead ahead captain!! Oh and don’t worry yanks, Mitt Romney is apparently going to save you all, and the rest of the world for that matter.

And for anybody that has a 401K invested in the stock market, be aware that this fiscal cliff includes increases in taxes on both dividends and capital gains. This could easily create a huge selloff in the market later this year as the big investors scramble to lock in their gains before the tax hikes take affect.

Also, don't forget that the national debt limit will be reached in mid to late December this year. Does anybody think our do nothing congress can handle resolving the fiscal cliff issues and agreeing on raising the debt limit again?

reply to post by surrealist


Here is my problem with that type of sentiment (and the real issue coming up in November, which few seem to ever bring to the table):
The US House of Representatives will be majority GOP after the elections. That is essentially a guarantee. I don't see the makeup of the Senate changing all that much. Congressmen are notoriously stubborn while Senators historically will work with whoever sits in the White House to get things accomplished (though those accomplishments aren't always "good").

The problems will do nothing but worsen if we're stuck with another 2 years like we've had, with an unyeilding president paired with an unyielding Congress. That factor is largely what is to blame for this austerity in the first place... mandatory cuts plus refusal to budge on taxes from both sides. The best I can say about Romney is that the House will support him and the Democrats in the Senate will ultimately search for compromises with him. History would indicate that the current gridlock will continue unabated if Obama is reelected.

Neither individual running for president "deserves" the position nor is either qualified to be president. However, if you view it from a damage control aspect, trying to salvage some sense of (pardon the term) hope for the future sustainability of America, the US voters are almost forced to side with the one who is most likely to have the support mandatory to slow the train down before it goes off the cliff.

Looks like everyone on the government "dole"/payroll is going to get a financial haircut.

Wonder how they will distribute the austerity. Who will have to bite the bullet first, the poor, old, sick, the bureaucrats, defense.

I agreed with you up until this point:

Originally posted by burdman30ott6
The problems will do nothing but worsen if we're stuck with another 2 years like we've had, with an unyeilding president paired with an unyielding Congress. That factor is largely what is to blame for this austerity in the first place... mandatory cuts plus refusal to budge on taxes from both sides.

Unyielding president? Refusal to budge on taxes from BOTH sides? Are we discussing the same president and congress, the ones in the US? Because what I remember is Obama capitulating to every single rep demand of the Obamacare bill in some way, short of trashing it altogether, and then Obama holding private talks with the reps to try to get a tax/budget cut compromise for the debt limit bill. I also remember the dems saying "some cuts, higher taxes" in the beginning of the debt ceiling fight, and the reps saying "no new taxes, lots of cuts" when they began. In the end, what the reps rejected that led to the failure of the commission and subsequent mandatory cuts was a compromise from the dems that said "$1 in tax hikes from the rich for every $10 in budget cuts" but that wasn't good enough for the right. They insisted on no new taxes as a non-negotiable prerequisite. But yet, it was BOTH of their fault?

The best I can say about Romney is that the House will support him and the Democrats in the Senate will ultimately search for compromises with him. History would indicate that the current gridlock will continue unabated if Obama is reelected.

You really think the dems will just roll over and be doormats for Romney in the end? Think again. This country is destined for gridlock for a long time precisely because we now don't care who's in the White House, if he's not our guy he must be opposed at every chance and relentlessly attacked until our next chance to vote him out.

Welcome to the brave new world. There is no "slowing down this train" anymore, the kind of austerity necessary to fix our terminal debt issues would literally mean starvation for millions. Food banks are already stretched to the limit; they have no room to take on new needy families. They will starve.

This storyline pretty much follows the template set back in the last Depression. 1929 the Market crashes and 4 years later, the economy bottoms out. Then it actually starts to mildly and weakly recover by 1936. Then Congress enacts a stiff rollout of tax increases and the US economy again nose dives, even as Europe continues to grow and recover. The Great Depression was still pervassive as late as 1940 and was only offset by the onset of WWII. Even after winning WWII, the USA still did not match peacetime output and prosperity levels of 1929 until 1949,... about 20 years later. Based on that timeline, we are about 1934-35.

This is what we can look forward to... at least another 4-8 years of slow growth/ no growth... inflation... and probably some form of major world conflict. The military incursions into Iraq and Afghanistan can even be compared to the military incursions into the "Banana Republics" of the 1920s and 1930s...

It's as if we are doing a 21st Century version of the 1930s... "It's dejavue all over again."

Only this time, are we taking on the role of Germany?

3rd world country status here we come!~@~

reply to post by RealSpoke


us, Europe and everyone we do business with that we will not invade to solve our shortcomings or for target practice....

Originally posted by RealSpoke
3rd world country status here we come!~@~

Sure looking that way don't it. If we're lucky maybe the whole 12-21-12 thingy is real and we won't have long to worry about it.

Originally posted by burdman30ott6


"Could" throw the economy back into recession? That's grade 'A' bullcrap right there. The economy remains in recession, or at least the average American household is mired in the effects of the recession, regardless of what Wall Street is doing. Prices on necessities; medicine, food, clothing, energy, utilities, fuel, rent, etc are skyrocketing. Sallaries are either stagnant or in decline. Jobs are anything but robust. People are struggling to make ends meet... and here comes a supposedly unavoidable baseball bat straight to the back of the head. The average American is Ceasar from Rise of the Planet of the Apes. We've lived a sheltered life, expecting success and happiness, and we're about to be thrown into a cage alongside a world which has lived their life in the antithesis of our experiences, filled with uncertainty, violence, and disappointment. We're going to have to prove ourselves here... will we take the confinement, abuse, and neglect or will we forcibly extract ourselves from the cage and refuse to play the game anymore?

Honestly?

Its hard to top this, as its exactly how many of us, view the current situation.

How anyone can still say its getting better, beats the hell out of me. Lets see how people learn to live with even less on their plates, after having it, so good, for so long.

I would say we'll see things starting right after the election.

Most of us on the outside have been looking at the USA and wondering when the penny would drop. It seems that most Americans not affected by the crisis already seemed to think it would never affect them at all. It's like most of the USA are living in their own little bubble of delusion, and no matter how many times people point out the trillions in debt, people just don't get it.

I see the collapse of the € is still pretty much being ignored too. This is potentially one of the most devastating events we're expecting, and it will hit the USA hard in possibly extremely fragile times.

Spain is on the cusp of collapse, and Greece too. Both are going to be experiencing massive protests in the coming months, with a revolution in Spain highly probable due to the extreme right-wing nature of their government and the public resistance to outside autocrats that a bailout would invite.

Spain is going to need a massive bailout, and that comes with agreements that the people of Spain cannot and will not accept. If we think their protests so far have been impressive, just wait until the right-wing government there signs a slavery deal with the IMF and ECB. That will most certainly bring millions of people out onto the streets, because it will show that they have failed already, as many expected.

Just like all other nations in this mess, they are just digging the hole deeper and deeper, and expecting the public to accept it.

If that results in a revolution and the overthrow of the Spanish government, the € will be refused in favor of a return to the Peseta. If Spain leaves the €, it will mark the end of the currency.

When the € collapses, that will hit the USA, and every other nation too. Our banks and markets are exposed to the € on a massive scale. It would cause a global collapse of the markets, a crash the likes of which we have never seen.

But, and this is the good bit, it would be the short and sharp reset that we should have had back in 2008. I believe it will be chaos, but far shorter chaos than we will have if we keep digging the hole deeper and deeper.

Everything could have been avoided if our governments had seized the failed banks and corporations when they failed, and then allowed competition to flourish. Those responsible should have been arrested and charged. The following years would have seen a return to responsibility, economic diversity and natural redistribution of wealth from the global corporations hoarding it to the many hundreds of thousands of smaller businesses arriving to take their place.

All of this could have been avoided if the politicians were not in the pockets of the bankers and corporations that failed caused the mess we are now in. If they had not bailed them out, and they had actually allowed the natural capitalist system to deal with it properly, then we would be over the worst of it by now and probably be back to stability.

That's my take on it. I know there will be others who disagree.

Government "austerity" is no nightmare. More like just what the doctor ordered.

Originally posted by sprtpilot
Government "austerity" is no nightmare. More like just what the doctor ordered.

so beating down the people because of the bad bets made by bankers and wall street is supposed to make it better?

it doesn't matter any longer who ends up in the oval office, we have been sold down the river already. the hundreds of trillions in debt accumulation, hedges and so forth have already doomed the system to failure, as it should have. no president nor congress can fix it, none that we have available anyway.

many think our legislators are not getting anything done because of political grid lock, but the fact is they have nothing they can do and they know it. they cannot fix a global tyrannical economy, one built on interest and debt. it's almost as if it was done by design really.

just one little bit of research reveals the ignorance of this system. take Italy for instance, they have to borrow money at 6% and because of the EU rules, loan it to Spain at 3% for a bailout. that's how screwed up the global system has become. we do essentially the same thing with the FED, we borrow our own money and pay it back with interest, how much longer does anyone think that can go on for.

some big changes have to take place and i truly believe it will take a total collapse in order to rebuild something that works for everyone and not just the upper crust.