The Flinchum File

Thoughtful Economic Analysis and Existential Opinions
Subscribe to the Flinchum File
View Archives

Between the Devil and the Deep Blue Sea

11/16/2011

Who worries about running off a cliff . . . when a grizzly bear is breathing down your neck?

At a meeting yesterday, I was asked why I was not more concerned about America running off a cliff if the SuperCommittee doesn’t produce a deal one week from today and Congress doesn’t approve it by Christmas before draconian cuts in government are made New Year’s Day?

The stock market is busy fleeing the European grizzly bear and starting to accept that the SuperCommittee will fail, and that the U.S. credit rating will be reduced again, but the draconian cuts which are a creature of Congress will be postponed by Congress.  This explains much of the slow leakage we’ve been seeing in the stock market.

A pure financial crisis is much more scary than a pure fiscal crisis.

Suppose the SuperCommittee does produce a workable plan, the market will rally strongly.  But, if Congress continues to confuse intransigence with courage instead of stupidity, the leakage will resume.  Of course, none of this matters in the short run if Europe self-destructs. 

We are a fee-only advisor providing best interest fiduciary services to clients
in Chesapeake, Newport News, Norfolk, Suffolk, Virginia Beach, Williamsburg, and the surrounding areas of Hampton Roads.

CONTACT BAY CAPITAL ADVISORSWe Will Respond Promptly

Contact Us Bottom