A Fiscal Flowchart For Dummies: Here Is What Happens Next

Zero Hedge ^ | 12/21/2012 | Tyler Durden

[SeekAndFind]

Confused by what is about to take place amid the loud noise, political posturing and rhetoric that as soon as tomorrow will hit an unseen before level as Obama's plan to split the GOP has worked so well it has completely backfired and thrown any game theoretical forecasts out of the window? Here is Goldman's fiscal flowchart, which is not for faint of heart, as ever more signs point to the box with the all caps "recession" written all over it.

 

[jdsteel]

The thing that drives me crazy is all of the reports that say “increased taxes and spending cuts will hurt the economy”. Spending cuts will NOT hurt the economy. Increased taxes will.

[Texas Fossil]

Programmers don’t even use flow charts today.

[traditional1]

I'll say it again: we have a 1-Party System now, with (R) and (D) on the same protect-our-jobs-mentality, maintain Power, and use Taxpayers to buy our positions.....NOTHING will improve this way, and it will be RAISE TAXES, RAISE the Debt Limit, don't cut handouts (especially to blacks and Illegals),and stifle the Economy.

Payoffs to favored contributors (Unions, Banks, Foreign 3rd World Slugs, etc.) is the "American Way" today and for the forseeable future.

[PowderMonkey]

Umm...crystal ball sez "11th hour short-term faux solution. Can continues its journey down the road." Quelle surprise.

[Mr. Jeeves]

Spending cuts hurt the economy in the sense that a lot of businesses are government contractors - if the government isn't buying from them, they get into real trouble in a hurry.

I'm not saying that these companies have healthy business models, only that it's true that an involuntary cut back in the gravy train will damage the economy in the short-term.

[Red Badger]

Here's what will REALLY happen:

[jdsteel]

I am fully aware of that. Where I disagree is that it will send the economy into depression as advertised. IMHO the cuts outlined in the fiiscal cliff will not.

[sevinufnine]

Fiscal Cliff?

[sevinufnine]

“Programmers don’t even use flow charts today.”

uhhh...yes we do. All the time.

[lacrew]

I think we’ve already gone over the cliff.

We can’t pay our bills, unless we borrow more money?

That’s the cliff.

We’ve been falling off of it for a long time.

None of the ‘theater’ going on in Washington has anything to do with reducing debt....none of it. They’re just arguing over which method is best to go further into debt.

Its not alot different than a broke guy with maxed out credit cards calling around, trying to get his limit raised.

[alloysteel]

Recession? The economic climate shall improve so much that we ONLY have a recession?

We are in a major DEPRESSION, which is going to continue with no end in sight, much like the New Deal era about the year 1936. Coincidentally, a huge new tax had also been passed about that time, which was to take effect immediately, but it was for a program that would not take effect until a couple of years later, much like the “Patient Protection and Affordable Care Act of 2010”, but on a much smaller scale. Social Security levied a tax of 2% against wage incomes up to what we would think of as a very modest level today, starting with Dollar One. In a time when average annual wages were about $600 a YEAR, the wage earner was assessed $6 of that, and his employer was supposed to kick in another $6 a year. But who is kidding whom, the entire amount came out of the pool of money the employer set aside for payrolls, so the real income the wage earner was getting was actually $606, of which the net was $594. And out of this he had to feed, clothe and house his family. Not much left over to run that $5 Model T he was forced to use for transportation to work, buying twelve-cent-a-gallon gasoline. Either that, or the trolley ride to work was five cents each way.

Same situation today, except the numbers are a lot bigger now.

[fwdude]

D & D? Is that a pesticide?

[Tenacious 1]

Hey, Let’s use “swim lanes” next time. They are more in vogue.

[Red Badger]

Dungeons and Dragons.........

[PGalt]

Thanks to all posters here and at zh...

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[Sgt_Schultze]

Government spending is a component of the GDP calculation. If government spending contracts, the GDP will necessarily shrink. That will make things look like a recession. It was for the purpose of concealing the extend of a GDP contraction that much of the stimulus money went to keep local government workers employed.

[762X51]

Spending cuts hurt the economy in the sense that a lot of businesses are government contractors - if the government isn't buying from them, they get into real trouble in a hurry.

That doesn't affect the economy one whit. The government had to first REMOVE that money from the private sector economy in the form of taxes to be able to spend it. That money ALREADY existed in the economy and the people whose pockets it was taken from would have spent it in a more beneficial and efficient manner without it having to go through the government sieve first. There is no magic "government" money. If you believe your own statement then you must believe Barry when he says we need more stimulus in the form of government spending! Government spending only enriches government and it's employees! Period!

[Donnafrflorida]

I use visio

[Mr. Jeeves]

That doesn't affect the economy one whit.

In the short term it is very disruptive. Over time the economy would be stronger for it, but the political class in DC have made lengthy careers out of pandering to the short-term interests of voters and contributors.

Remember what happened to Newt and the GOP House in 1995 - the last time anybody tried to do the right thing?