Industry NewsMarkets & Economy

Fiscal cliff: All tax increases and no spending cuts won’t fly

Future-Proof: Navigate Threats, Seize Opportunities at ICNY 2018 | Jan 22-26 at the Marriott Marquis, Times Square, New York

Lot goin' on. First the Fed, then the Cliff. The Fed has embarked on QE4, or open-ended, or without end. Whatever. Next year the Fed will buy $1 trillion in Treasurys and mortgage-backed securities (MBS), and continue to buy until enough people are back at work, and stop short only if inflation becomes a problem. The buying is designed to keep long-term rates of all kinds low and borrowing cheap, thereby reviving the economy. Naturally, markets didn't play along. Long-term rates rose after the announcement. Not a lot -- the 10-year T-note above 1.7 percent from lows near 1.58 percent, and mortgages pushing 3.5 percent. There is a logic to the rise. Several logics. First the crowd who from the onset of Fed efforts to save us in 2007 have been certain -- certain -- that inflation would follow, and been totally mistaken. Then the mob that believes QE opens the free-money door to "risk assets" -- stocks, gold and commodities. This is the fourth round of QE, or "quantit...