Budget Deficits | timiacono.com - Part 20

A “Make or Break Moment” for Greece

Another austerity vote and another bailout for Greece (its sixth) are on tap today ahead of a big meeting of European leaders over the weekend that, if past is precedent, will only defer making the tough decisions about the sovereign debt crisis that began in late-2009. (Doesn’t it seem like more than just two years ago that the incoming Greek government told that world that the outgoing government had “cooked the books” for the last decade.)

Virtually the entire country of Greece is shut down again for the second day as more than 100,000 people gathered in or near Syntagma Square in front of the government’s assembly building where the draft legislation passed initial voting last night and more voting on the details of the austerity plan will occur today.

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I”ve yet to have a look at the GOP debate this evening that, according to the news headlines, focused a lot of attention on Herman Cain’s 9-9-9 tax plan and had Mitt Romney and Rick Perry squaring off against. It likely didn’t draw much attention to Ron Paul, something which, according to the chart below from Journalism.org he’s probably used to.

Earlier, Paul unveiled his economic plan that would reduce the budget deficit by $1 trillion – no, not over ten years, over one year! Paul’s “Restore America” plan includes tax cuts and a 10 percent reduction in the government workforce that would eliminate the Departments of Education, Commerce, Energy, Interior and Housing and Urban Development.

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Will the Super Committee Sink Stocks?

[Following are excerpts from the current issue of the Weekend Update at Iacono Research.]

A simple Google news search on “super committee” turns up all sorts of headlines about a 12-member Congressional committee – split evenly between Democrats and Republicans from both the House and the Senate – that began work six weeks ago to recommend a set of proposed spending cuts and revenue increases totaling $1.2 trillion over the next ten years.

After just a brief look at the headlines, the difficulty of their job becomes clear:

10/10 Deficit ’supercommittee’ struggles as clock ticks – AP
10/11 Debt committee could raise risk of U.S. downgrade – CNN/Money
10/13 GOP: Defense cuts shouldn’t be part of super-committee plan – CBS News
10/13 House Dems recommend new taxes to ’super committee’ – LA Times
10/14 Republicans want debt panel to overhaul taxes – AP
10/14 Deficit ’super committee’ flooded with ideas. Will any work? – CSM
10/14 Panel Gets Earful Of Advice On Taming The Deficit – Kaiser Health News
10/14 Many suggestions but little time for debt panel – AP
10/14 Super Committee’s Cuts Will Impact Farm Bill – Dakota Farmer

With a set of recommendations due by November 23, just over a month from now, the progress made by this group (or the lack thereof) could be the biggest single factor in how asset markets move this fall and, based on initial indications (that are hard to come by since the committee has been operating in secrecy), things are not looking good.

(Continue reading this article at Seeking Alpha.)

“Total Disaster” in Europe Still Possible

Those whose hopes of a much bigger crisis in Europe are about to be dashed after the final approval of the EFSF bailout fund by Slovakia can take heart in this view from Reuters Breaking Views founder Hugo Dixon that the chance of a “total disaster” still exists.

Muddling through with years of zero or negative growth is now seen as the most likely scenario, an outlook that, some time ago, would have been considered a disappointment, but, after the events of the last few months, seems much less of one now.

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