WTF - 'Black Swan' Author Taleb: Fiscal Cliff Is Good for the US in the Long Run

[bsteadman]

'Black Swan' Author Taleb: Fiscal Cliff Is Good for the US in the Long Run

MoneyNews
Forrest Jones
11/29/2012

Excerpt:

The rapidly approaching fiscal cliff will benefit the country in the long run by wiping out complacency when it comes to managing the economy, said Nassim Taleb, the author and financial guru whose 2007 book “The Black Swan” predicted the current financial crisis.

At the end of the year, the Bush-era tax breaks and other benefits are set to expire at the same time automatic cuts to government spending are due to kick in, a one-two punch known as a fiscal cliff that could send the country into a recession next year if left unchecked by Congress.

Households, businesses, investors and policymakers worldwide are keeping an eye on Congress to see if lawmakers can put political differences aside and steer the country away from the cliff.

In the long run, today’s uncertainty will lead to a more resilient economy tomorrow.

“For me, it is a good thing because the economy requires once in a while to be shaken and people to be scared. Otherwise we’ve got trouble, sort of like the equivalent of a forest that hasn’t had forest fire in a while,” Taleb told CNBC.
.......................................

View the complete article at:

http://www.moneynews.com/StreetTalk/...1/29/id/465814

[bsteadman]

Krugman: National default ‘can’t happen’

NetRight Daily
Bill Wilson
11/29/2012

Excerpt:

In the past 30 years, the national debt has increased 1,328 percent from $1.1 trillion to $16.3 trillion.

From 1952 to 1982, it nearly quadrupled, from about $250 billion to $1 trillion. And from its 1922 level of $23 billion, it increased by 967 percent.

See a pattern?

What will the national debt be in 2042? An historically “modest” tripling to $50 trillion? Or perhaps a mind-boggling $100 trillion?

But not to worry, says New York Times pundit Paul Krugman. No matter how large it gets, we can’t default on our debt.

“[W]e have our own currency,” Krugman reassured the American people in a Nov. 25 column, and the government “literally can’t run out of money. After all, it can print the stuff,” unlike Greece, whose currency is controlled by the European Union.

Besides, he writes, interest rates are low and there is no sign investors are about to flee from the relative safety of treasuries.

That may be so — for now. Yet, for all of Krugman’s happy talk of investors continuing to buy U.S. bonds, he understates the degree to which the government is already resorting to the printing press to meet its weekly funding obligations.

Some $1.65 trillion of the debt is held by the Federal Reserve. Another $4.84 trillion of debt is held in the Social Security, Medicare, and other trust funds.

That means 39.7 percent of the debt — some $6.5 trillion — is held by government agencies. So, yeah, we can print it. But it is hardly a sign of fiscal health or of high demand for treasuries when just to refinance the current level of debt, the government must borrow 40 cents of every dollar from itself.
..........................................

View the complete article at:

http://netrightdaily.com/2012/11/kru...t-cant-happen/