Contract Now or Snap Later

Posted: Nov 13, 2012 12:01 AM

Thelma & Louise, a 1991 Academy Award winning film, gives pretty good insight into the quandary that both of our political parties are currently facing in dealing with the “fiscal cliff.”  After what was supposed to be a relaxing two-day vacation in the mountains turns into a gun-toting, man-killing nightmare, the heroines ultimately do what is right, and go over the cliff. 

There would be no months and months of legal preparations, legal defense, and litigious appeals; the psychological studies would be put back on the shelf, and most important, the cost to either incarcerate or execute Thelma and Louise would be avoided. 

The issues were dealt with swiftly and decisively.  Yes, they did the right thing and drove their 1966 Ford Thunderbird convertible over the Grand Canyon cliff, and into history. 

Speaking of taking decisive action, both Democrats and Republicans must agree to abide by a negotiated deal made in good faith almost two years ago. 

The concern is quite clear. 

If taxes are raised and a reduction in government spending occurred, we could slip deeper into an economic recession which might possibly become an economic depression. 

My comment, so be it. 

Sooner or later, we have to deal with a contraction that was so cleverly avoided in 2008. 

While Obama, Bernanke, and others take their bows for avoiding the breakdown during the credit crisis, the simple fact is that they merely postponed the inevitable. 

A stopgap solution may play well with an unconcerned constituency for the President and Federal Reserve Chairman, however, it does not negate the fact that their actions were simply a band-aid that covered an untreated, infected wound that now needs to be addressed and healed. 

If we indeed go over the cliff and the too-big-to-fail banks, in effect, do fail, then so be it, that should have occurred four years ago. 

If the auto industry, once again, starts to collapse without government intervention, so be it.  An abrogation of the rights of senior and subordinated bond holders to the auto union is not a solution, but rather a postponement of the inevitable. 

If the housing sector “house of cards” finally collapses and forces us to buy what we can only afford, so be it.  If all the culprits of the crisis are finally prosecuted, and they just happen to be buddies with Obama, then so be it. 

And if we have to start from square one again, so be it.  Bad endings usually present good opportunities for new beginnings. 

A drastic action may get us closer to a forced balanced budget, and it may even get us to stop the reckless spending which brought us to the edge of this cliff. 

In fact, our current dire situation may force everyone to agree with Thelma and Louise, that the only way to stop the madness is to actually go over the cliff and let the past be damned.

P.S. – God forbid that the politicians actually do what they said they were going to do, even if it was two years ago.