Mr. Sensitive

February 25, 2013

This Sequester Thing Might Actually Happen

Filed under: Uncategorized — lbej @ 14:40

Remember the fiscal cliff?  Financial media and general news media alike were in full meltdown mode from mid-November on, shouting about how we had had HAD to avoid the dreaded fiscal cliff.  CNBC is my proxy for the opinion of the rich people and corporatists controlling the Republican fundraising and electioneering machine–Fox News is for if you want to get the pulse of the racists and the zealots, not that you do.  The issues pushed by Fox News drive voter turnout; the issues highlighted by CNBC drive policy.  Well, CNBC ran a ‘countdown to fiscal cliff’ clock graphic during most of their daily market coverage beginning at the end of November(!), and the programming execs created a post-election network-wide theme they called ‘Rise Above,’ ostensibly urging Congress and the President (they’d failed to unseat) to put aside their differences and work together to avoid…dum dum dum…the fiscal cliff.  What did that mean?

The richies and the corporatists weren’t interested in going over the cliff.

So it should have surprised no one when the House Republicans seemingly caved, ‘allowing’ taxes on the wealthy to rise while raising the threshold for the top tax bracket and scuttling efforts to close corporate tax loopholes.  As part of that deal, the automatic spending cuts that were to accompany the automatic tax increases were tabled–until March 1.  That gave the new Congress and the President time to reach a broader, more comprehensive deal on entitlements, defense spending and other issues impacting the budget deficit.

Ha ha ha no.

Well, March 1 is Friday, and there’s no movement.  The President sounds like he’s working more on exposing Republican intransigence than on negotiating a deal, and the Republicans are saying not much of anything.  What about CNBC?  There’s no ‘countdown to sequester’ this time, no exhortations to ‘Rise Above.’  It’s not being ignored, but it’s being treated as just one of a number of challenges to the ongoing bull market, the same as this weekend’s Italian election and aggressive yen-manipulation being undertaken by the Bank of Japan.  What does that tell me?  Two things:

1.  This sequester thing might actually happen, because

2.  The richies and corporatists only ever cared about the tax component of the fiscal cliff to begin with.

With tax issues largely resolved, the corporatists are willing to get out of the way of the Tea Party crazies, and the crazies want Armageddon, or as close to it as they can get.  So far, the market isn’t concerned, and pullbacks have been short and shallow.  In part, that’s because the multinational corporations that dominate the major indices have geographically diversified revenue streams, but there may also be more than a little undue complacency.  In short, I think the sequester is happening, and I think it hasn’t been priced into equities at current levels.  Friday could be very, very interesting.

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