This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Creating a Kinder, Gentler Fiscal Cliff

2. A partial and temporary resolution before year-end, with both sides agreeing to work on a "comprehensive" and "permanent" solution in some future timeframe.

This is a likely outcome. Given the deep and wide pessimism whipped up by the media and punditry since the election, this would be very bullish, since it would indicate a conciliatory posture on both sides.

3. A swift resolution with enough bipartisan support to survive the next Congress.

This would obviously be highly bullish, at least in the short-term, but very unlikely. And even this best-case scenario is still bad over the long term.

There is no way around the cold math; we'll have to either pay more or spend less, or rather, both. Yes, there's always Fed inflation, from a certain detached and narrow perspective. But that's like changing brake pads when you see a collision coming, and with its own nasty side-effects and risks such as exacerbating the rich-poor polarization.

Humans got to the top of the food chain not by jumping off clearly visible cliffs. Nor do we owe our relative success for our ability to find optimal, complete solutions. Rather, we're great in finding solutions to muddle through, especially on social issues. It's in our genes.

One way or another, we'll throw enough crap at the cliff to make it a slope. But the bottom is exactly as deep as before.

Overall, I expect the market to shift away from the exaggerated pessimism over last few weeks and adopt the more realistic "fiscal slope" view. Sound-bytes from Washington will continue being over-analyzed and carry much more weight than deserved.

And, as the cliff becomes a slope, other worries may come into focus -- such as the everlasting euro drama, middle-east and new developments in the ongoing power transition in China that will conclude in March.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
AAPL $94.02 0.00%
FB $104.07 0.00%
GOOG $683.57 0.00%
TSLA $162.60 0.00%
YHOO $27.97 0.00%


Chart of I:DJI
DOW 16,204.97 -211.61 -1.29%
S&P 500 1,880.05 -35.40 -1.85%
NASDAQ 4,363.1440 -146.4150 -3.25%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs