- the budget bullies are missing the point; and
- that the consumer fears the cliff.
They're All Missing the Point Posted at 7:37 a.m. EDT on Friday, Dec. 14 It hit me last night: Here's what I think is so annoying and niggling about the budget talks between House Speaker Boehner and President Obama. I think they don't understand, neither one, the consequences of what they do on the American business public. That's because, in many ways, the business public is not represented by either person. As I parse through the Republican and Democrat posturings, I hear two major skeins of thought. For the GOP it's the worries about the small-business person and how much their motivation is being hurt by government tax policies. For Obama it's "the folks who work at places who aren't helped enough by government programs and pay more than their fair share for them in taxes." That's what makes the whole thing so unrealistic. First, small businesses revolve around bigger businesses. When you set up a small business, unless it is about a particular better mousetrap, what you typically need is traffic -- that which comes from the growth of big business in the area. Also, you want to create a service or hospitality business? You need someone to cater to. You aren't worried about taxes. You are worried about customers. Who is worried about the customers in Washington? Who is worried that their psyche may be damaged by what Washington is doing? Who is worried about them transacting with the small-business people and those they employ? How do I know this? As a serial entrepreneur, I recognize that customers are the lifeblood of why you are successful. If you are worried about tax rates, you are going to fail. If you even consider tax rates as a reason to start a business or not to do so, you shouldn't start it. Don't waste your time. Stick to your day job.
The Consumer Feels the Fear of the Cliff Posted at 6:30 p.m. EDT on Wednesday, Dec. 12 Was today the day when it dawned on people that without a deal, the consumer could be in real trouble? Was today the day when it hit the market that the regular guy is concerned? I have to tell you that the comments from Wal-Mart ( WMT), on top of the comments from Dollar General ( DG) yesterday about gross margins, tell me that the everyday person is now starting to figure out he has to be worried, even if he is not sure exactly what it is that he is supposed to be worried about. He knows we have a big budget deficit. He knows, like he knew when the debt-ceiling crisis occurred, that something bad is going to happen, and he knows that it might be something bad happening to him. So that's who pulls back. We may now be past the point of who is to blame and more to the place of "I don't care who is to blame, do something." That's why, contrary to many people on this site, I was quite contented with what Ben Bernanke is doing. He knows that sudden austerity is coming, and the last thing the country needs is a guy who is going to raise interest rates now because we had some good housing data. I think he recognizes how fragile the construction and auto rebound is, and he needs to send a signal that he is not a Jean-Claude Trichet figure who wants to start raising rates as soon as possible. It drove me crazy today to hear so many people talk about how the real problem now is how Bernanke will get out of this position when things get better. To me, what's pertinent is, who is going to hire if everybody gets a tax increase and if instant and stupid spending cuts cause 2 million jobs to be lost? Bernanke knows that austerity is good incrementally but hideous all at once and without thought. That's why he coined it a "fiscal cliff," for heaven's sake. So don't blame him. He knows that consumer and business confidence is falling. He knows the cliff is coming. He just wants to make the landing as gentle as possible, although when you jump from a cliff without a rope, the results tend to be less than optimal. Action Alerts PLUS, which Cramer co-manages as a charitable trust, has no positions in the stocks mentioned.