In response to:

No Cliff Calamity: That’s What Stocks Are Correctly Predicting

amackent Wrote: Dec 12, 2012 11:33 AM
Or maybe the market anticipates that nothing will be done. Taxes will go up and spending will be sequestered. Our deficit will not be solved, but will be restrained. I really don't think tax rates matter as much as spending restraint and trying to close the gaping deficit we're facing. To frame the whole debate in terms of tax rates exhibits gross tunnel vision. You're framing the whole debate poorly. Pick a reasonable level of gov't spending relative to GDP, then cap spending at that level and design a tax code to raise the revenue. I'd say 15% or less should be enough, but 19% is realistic. Right now we're taxing at closer to the 15% level but spending at closer to 25%.
Despite all the media hullabaloo about the fiscal cliff and a potential recession if none of the Bush tax cuts are extended, stock markets have behaved calmly throughout this whole period. In fact, as of this writing today, the Dow is up 100 points.
I’m going to guess that stocks, in their wisdom, are correctly sniffing that there will be no calamitous falling off the cliff. By that I mean there will be no $500 billion tax hike, which would be an economy killer.
Instead, after speaking with prominent Republican House and Senate members, I have come to believe the following:...