Schiff concludes:
I do not think it is a coincidence that while the banks are suffering a regulatory backlash as a result of their perceived culpability for the mortgage crisis, the credit rating agencies have been relatively untouched. But the credit agencies played a key role in catalyzing the mortgage crisis by giving questionable ratings to the mortgage backed securities. My guess is the government simply does not want to open up that can of worms as similar mistakes are being made with respect to the agencies’ ratings of government debt.
The truth is that regardless of what you call it, going over the fiscal cliff is not the problem, it is part of the solution. Our leaders should construct a cliff that is actually large enough to restore fiscal balance before a real disaster occurs. That disaster will take the form of a dollar and/or sovereign debt crisis that will make this fiscal cliff look like an ant hill.
Shut the Federal Government down for six months.
If ‘Sequestration’ is NOT allowed to happen now, all those voters in VA that were told they would lose their defense jobs if Obama was re-elected will say, “I voted for Obama, and still have my cushy defense job ..., why should I ever vote Republican again ...”
i think the republicans forcing a plunger over the cliff at this time is a strategic mistake.
here is my argument: all of japan, uk, europe and the usa are on unsustainable gov’t debt trajectories; in addition, the uk, europe and japan all have much larger banking sectors (reiative to their economies). the size of the financial sector is important because in a sovereign debt crisis, it becomes a banking crisis as well since the big banks hold so much gov’t debt (europe has now moved past the sovereign debt crisis into the sovereign plus bank bailout crisis)
the usa also has better long term growth prospects then these other countries.
when one of these economies gets into a debt and hyperinflation wreck, the economic meltdown will be so severe that everyone in america will realize that monster debt and deficits are a huge risk.
part of the problem now is that liberals have economic “experts” like summers and krugman telling them that the debt is no big deal, and therefore liberals should use the fiscal cliff to gain political advantage, not solve the problem.
Until the Summers, Krugman theory of no-risk massive debt is discredited, the liberals will have a negotiating advantage.
i know that Schiff does not agree with me but because of the smaller financial sector, the USA is least likely to “go first” into a sovereign debt crisis compared to the usa, japan, europe
I agree - until the pain is felt across the Nation, and real suffering occurs, nobody will have the gonads to DEMAND a change in course. If sequestration occurs, and all of Zero’s plans for higher taxes, more expensive energy, and despotic control of the People kick in, the despair will set in, then turn to anger, and finally result in the People finding a collective voice. It will be ugly though - Waco and other government atrocities will pale in comparison...
Over the cliff and let the recession happen. It was going to happen anyway.