The Coming Fiscal Cliff

 

Since the election, the big story that is grabbing the attention of those of us who are political is the impending doom of the "fiscal cliff". This is the self imposed deadline for hitting the debt ceiling for the nation of the USA.

 

Let's say you are operating your household on a line of credit from your bank. They have given you a credit limit and you have gone right to the limit of that credit. But you are in debt, the bills are due, and that Cancun vacation is coming up soon. What to do? Normally, we would stop spending, try to earn more, or sell one of our children to the bank.

 

But the USA is not normal. They are 'out of control government'. What they need is not cuts, but a severe amputation, somewhere just below the ear lobes. What they are going to do is squabble about tax break expiration's, spending cuts and which social programs and 'defence' budgets will be cut as well as just how severely they can tax the rich without driving them all to Central American countries with their assets in a carpet bag. We are being assured that the lawmakers in the nation's capitol are hard at work hammering out a solution. 

 

Well, here is the solution as it has been 74 times since March of 1962. They will raise the debt ceiling. They have no choice. Well, actualy they do, but it involves pain.  

 

But here is the kicker. Getting back to the example above, where you as a homeowner have reached the debt ceiling, the ultimate call will be made by your lender, your bank. He will call your loan. For the USA, the lenders are Zhou Xiaochuan, Governor of the People's Bank of China, Masaaki Shirakawa, Governor of the Bank of Japan, and Abdullah bin Fahd al-Mubarak, Governor of the Saudi Arabian Monetary Authority. They will, in the not too far distant future, make the call on the debt ceiling and nothing will be like it was.

 

          The party will be over.