The problem with that reasoning is that it ignores the possibility of the fiscal cliff creating itself. What would have been a temporary and, let's face it, kind of necessary two-way candle burn has been so oversold as the beginning of the Weimar economy that every financial institution in the world has its red pens out for us in case we can't demonstrate that our government can stop trying to sabotage itself long enough to work out a solution, any solution.
Depends who we're talking about here. I'm sure there are more foreign agencies who'd be thrilled to downgrade the US credit rating again for any damn excuse they can find.
If we're talking about Wall Street firms, on the other hand? Well, they're not so keen on doing stupid, reckless things that destabilize the world economy if it also means they hurt their chances to get a bailout from Uncle Sam.
I can definitely see some market volatility, like we got the last time they went through this song and dance. Maybe worse. But I don't see it hitting anything like 2007 crash levels of badness, no matter how many falling-to-your-death-armageddon metaphors the politicians and pundits flog.
Again, the entire fiscal cliff argument is not about some great economic danger. It's about convincing you and Serious People™ that there is a real economic danger so you'll stomach whatever austerity measures they push through. And why? So that we can add another layer of gilding to this new gilded age.
That too. We know where this is all heading -- the Republicans are going to make a big show of fighting until the last minute, and then give in on the tax increase, while the Democrats are going to cut the social safety net, call it a necessary sacrifice, and act like it's a huge victory.
Precisely WHEN the Republicans stop fighting and accept a tax increase is going to largely depend on how much of a fight the Tea Partiers in the House put up. I think the leadership would like to have this settled before the deadline, and Boehner's kicked some asses to try and show the Tea Partiers he means business this time. But it's possible the House Tea Partiers will drag it past the deadline and provoke a massive public opinion backlash, which will still eventually result in them backing off and accepting a tax increase. I can picture it playing out a lot like the government shutdown of 1995, except in this case the leadership is actually trying frantically to PREVENT the craziest elements of the party to drive it into a ditch.
And of course whatever tax increase passes, it'll have some brand new loopholes and concessions to the 1% somewhere in it.
And yes, that does suit the agenda of the Tea-party types just fine.
Except for the part where they all take the blame and set themselves up to lose their seats in 2 years and their committee memberships a lot sooner than that.
If this thing goes south, the Republicans get the blame. That's a pretty consistent message across all the polls. And the leadership knows it and is prepared to make life difficult for anyone who doesn't fall in line.
