Friday, December 28, 2012

December 28, 2012

Wilbur Ross Sees Recession, Warns of 'Greek' Situation
by Forrest Jones and Kathleen Walter
December 27, 2012

The U.S. economy faces a recession if the nation goes off the fiscal cliff and key tax cuts fully expire at the end of this year, said Wilbur Ross, chairman and CEO of WL Ross and Co.

And, in the wake of news the U.S. will hit its debt limit earlier than expected, the billionaire financier warned that the United States could soon face its own “Greek” style debt situation.

Failure to stop automatic tax increases set for Jan. 1 “would obviously have a big negative effect on disposable income and consequently, I believe would put us back into the recession when coupled with the spending cuts that are also part of it," Ross told Newsmax TV in an exclusive interview Thursday.

Ross says that even a compromise deal that stops tax increases for many still may not save the U.S. economy.

"I think that if we don't go over the full fiscal cliff, because we will go over some sort of a cliff even if you only raise the rates on the high-bracket people, and even if you cut back on the sequester, there still will be jolts to the economy," Ross said.

"So the question isn't whether or not we go over a cliff, it's just how steep is the cliff."

Ross scoffed at the idea that a deal that includes tax increases on the wealthy could avert disaster.

"It's less damaging than if everybody goes over the cliff, but it still is damaging," Ross said of keeping tax breaks in play for everyone except top earners.

"Worse than that is that it really doesn't solve the problem. The problem we have is not so much too little tax, the problem is too much spending," Ross said.

Republicans have proposed a compromise plan that calls for income tax increases for top U.S. earners coupled with spending cuts.

Republicans in the U.S. House of Representatives canceled recent plans to vote on a proposal put forth by House Speaker John Boehner — widely known as Plan B — that called for tax hikes on incomes over $1 million, well above a White House plan that would hike taxes on incomes topping $400,000. Plan B also included future spending cuts on entitlement programs like Medicare and Social Security.

But Ross believes such proposed spending cuts are not real.

"The other thing that I think people don't focus on is, nobody is talking about, cutting the actual, total amount of spending. All they are really talking about is reducing the rate of increase in spending. And that's what makes it so dangerous," Ross said.

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Rampage Rick: You Have to Watch CNBC’s Santelli’s Epic Anti-Fed, Anti-Washington, Anti-Easy Money Rant
by Becket Adams
December 27, 2012

CNBC’s Rick Santelli (i.e. the original “Tea Partier”) has long been a critic of the Federal Reserve’s monetary policy and is a staunch opponent of runaway government spending. So it shouldn’t come as a surprise that he gets really, awfully, terribly upset when people talk about the U.S.’ economic future and fail to factor in Fed policy.

“Why do we look at the Dow Jones industrial average to handicap if this country’s going to go down the sewer in a couple of days?” Santelli shouted at trader Jim Iuorio during a discussion on the impending “fiscal cliff.” “We can’t afford our bills anymore!”

“The stock market is an immediate gratification for investors to make money. I don’t have a problem with it, but it doesn’t give you a glimpse into our future, or our kids’ future,” he added.

Santelli continued, turning his attention to the Fed’s inability to spend within its means.

“The fact that we have $100 trillion dollars of underfunded liability, it isn’t a question whether that’s going to work!” Santelli said.

“If you can tease out the fact that the Fed has by throwing in all of this money over the last several of years and that’s a difficult thing to do,” Iuorio said.

“The Fed doesn’t have a clue! Neither does the president and neither does Congress!” Santelli shot back.

“The stock market takes all the news stories and filters them for us,” Iuorio added.

Santelli went on to accuse U.S. Treasury Secretary Timothy Geithner of being less-than-honest with the American people about the current state of the nation’s finances.

“[Geithner] gives a speech about hitting the debt ceiling? I’d like to see if he can even count to a million much less $16.4 trillion!” the fiery analyst shouted, referring to the national debt.

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Stormin' Norman, Warrior at Peace
by Joel B. Pollak
December 27, 2012

Not since General Douglas MacArthur had Americans celebrated a general as we did "Stormin' Norman" Schwarzkopf, who cut a figure of strength on the world stage as he decimated Saddam Hussein's military--which was then thought to be the world's fourth most powerful--and restored our confidence in our armed forces.

In the Gulf War of 1991, Gen. Schwarzkopf not only liberated a small nation, Kuwait, from an aggressive invader, but also liberated the U.S. from the timidity and apprehension that had hovered over our military since the end of the Vietnam War. What President Ronald Reagan made possible with his investment in military technology and hardware in the 1980s, Gen. Schwarzkopf brought to fruition in Iraq, shocking even our European allies with the degree to which our military had leapt generations ahead of friend and foe alike.

It is almost difficult to imagine today, but Schwarzkopf led a broad coalition of armies that included every significant Arab military power, with the exception of Jordan. The coalition's crushing victory set the stage for American military, economic, and cultural dominance in the post-Cold War era, enabling President George H. W. Bush to embark on building both the "kinder, gentler" nation and the "new world order" he had promised.

In that victory, there were seeds of future conflict. Coalition forces--obeying United Nations Security Council mandates--left Saddam Hussein in power, enabling him to quash an uprising with appalling brutality. And the presence of foreign forces in Saudi Arabia inspired Osama bin Laden to embark on his terrorist war against America. The recession that followed the war caused Americans to turn inward, replacing Bush with President Bill Clinton, who oversaw military reductions and arguably neglected to stop the rising Islamist threat.

But none of that was Schwarzkopf's fault. He left policy to the diplomats and politicians, and focused on victory, which he secured with honor. He left the national spotlight as a hero, and departs this world beloved by the men and women who fought under his command, well remembered by the people for whom he fought.

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In this April 22, 1991, file photo, Gen. H. Norman Schwarzkopf waves to the crowd after a military band played a song in his honour at welcome home ceremonies at MacDill Air Force Base in Tampa, Fla.
"Leadership is a combination of character and strategy. 
If you must be without one, be without the strategy" 
- Norman Schwarzkopf

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