The Fiscal Cliff: An Economic “Heart Attack”

December 4, 2012


Bank of America/Merrill Lynch economist Ethan Harris is warning that the game politicians in Washington are playing ahead of the “fiscal cliff,” is dangerous and could amount to an “economic heart attack.”

Letting the country careen over the fiscal cliff as part of a bargaining strategy to push through fiscal reforms would serve as a dangerous game politicians would be playing with the economy, said Bank of America Merrill Lynch economist Ethan Harris.

At the end of this year, tax hikes are scheduled to kick in at the same time government spending cuts take effect, a combination known as a fiscal cliff that could tip the economy into a recession next year if left unchecked by Congress and the White House.

Some lawmakers have suggested Jan. 1 can come and go without a deal and address the issue by putting one another’s feet to the fire or punting on deadlines as tax hikes and spending cuts take root.

Even talk of such strategy can damage the economy.

“One of the most dangerous ideas circulating in Washington is that it is okay to go over the cliff temporarily,” Harris said a note to clients, according to CNBC.

“Threatening or actually going over the cliff will likely do serious damage to economic and market confidence. What some people are calling a ‘bungee jump’ could cause an economic heart attack.”

Investors, meanwhile, are growing increasingly nervous.

“The clock is ticking,” said Quincy Krosby, market strategist for Prudential Financial, Bloomberg added.

“The focus is on what goes on in Washington. The market will be volatile. You’ve got to be very well-hedged given that the market is so much headline-driven.”

The best hedge against uncertainty in the stock market has historically been gold.




Wealthy Investors Dumping Stocks, Real Estate and Businesses Ahead of Fiscal Cliff as Market Guru Warns of Market Collapse

November 13, 2012


As many readers already know, due to long-term irresponsible fiscal policies, the US government finds itself headed to the edge of a so-called “fiscal cliff.”

Policymakers in Washington are trying to strike a deal to head off the carnage, but their track record is awful on such deals. What we are soon to be faced with is a combination of large budget cuts and sizable tax increases, which will kick in if nothing is done.

Faced with the possibility of tax hikes, America’s wealthy investors are taking action ahead of time and it isn’t good news for the markets; wealthy investors are liquidating stocks, real estate and even whole businesses to avoid higher tax rates in the future. This is obviously terrible news for the stock market, the real estate market and the economy as a whole, creating the type of environment in which hard assets, such as gold coins, thrive.

Meanwhile, long-time market analyst, Marc Faber of The Gloom Boom and Doom Report actually says that there will be no fiscal “cliff.” Nevertheless, he predicts that corporate profits are certain to disappoint, resulting in a stock market decline of 20% or more. Faber points to Apple Computer as a leading indicator; Apple’s stock has fallen 20% in recent months already.



Who Can You Trust?

August 16, 2012

One of the most frustrating and worrisome aspects of investing is the fact that, on occasion, investors are victimized and lose their money to crooks and swindlers.

And those crooks and swindlers are not always small-time operations.

Take MF Global for example. MF Global was one of the fastest rising trading firms in the financial world, headed by the former governor of New Jersey, Jon Corzine.

Thousands of clients lost billions of dollars when MF Global used their money in unauthorized transactions that subsequently went bad. In most circles, that’s called “stealing.” When someone gets caught stealing, they are supposed to go to jail.

But that’s not going to happen in the case of MF Global. The firm stole from its clients then collapsed and now no longer exists. The ace investigators at the US government have just concluded their work and lo and behold, NO ONE will be charged with a crime in this disgraceful affair.

This is what is known as adding insult to injury.

Investors need to be careful about putting to much trust in Wall Street. And they need to be careful about putting too much faith in government regulators to protect their hard-earned wealth.

All too often, promises from Wall Street and Washington are hollow.

Investors need to put their faith in an asset that is not dependent upon anyone’s promises: GOLD. Gold isn’t anyone’s liability and it doesn’t depend on anyone’s backing or guarantees. That’s why it should form the financial shield for the properly diversified investment portfolio.–finance.html?_esi=1