Wednesday, January 2, 2013

Fiscal Bluff, uh, Cliff Notes from Reuters

News stories about the Fiscal Bluff from Reuters I left as a comment on tonight's Overnight News Digest at Daily Kos.

With final vote, Congress resolves "fiscal cliff" drama
By Kim Dixon and Richard Cowan
WASHINGTON | Wed Jan 2, 2013 12:06am EST
(Reuters) - The United States averted economic calamity on Tuesday when lawmakers approved a deal preventing huge tax hikes and spending cuts that would have pushed the world's largest economy off the "fiscal cliff" into recession.

By a vote of 257 to 167, the Republican-controlled House of Representatives approved a bill that fulfills President Barack Obama's re-election promise to raise taxes on top earners.

The Senate passed the measure earlier in a rare New Year's Day session and Obama said he will sign it into law shortly.
The reaction from the markets is already favorable.

Asia stocks at five-month high as U.S. fiscal cliff crisis ends
By Vikram Subhedar
HONG KONG | Wed Jan 2, 2013 12:57am EST
(Reuters) - Asian stocks hit a five-month high and the dollar fell as a last-minute deal ended the U.S. "fiscal cliff" crisis that threatened a U.S. recession and roiled world financial markets.
The temporary reprieve that the deal offers the U.S. economy also sets up Wall Street for a strong start to trading which resumes later in the day.

Asian stock markets cheered the developments as a major risk for investors, namely a slump in global growth, appeared to have receded for now.

"This is great news for global growth and explains why shares and other growth-related assets such as the Australian dollar are up strongly today," said Shane Oliver, strategist at AMP Capital.
Risky assets across the board got a lift with crude oil futures up 1.1 percent and copper futures in London jumping 1.7 percent.
Yes, I had to include that bit about crude oil prices.  On the one hand, increased oil prices are not a good thing.  On the other, it's a sign that the markets expect the economy to continue to expand, which is a good thing.

However, the bounce may be short-lived, as this video suggests.

Jan. 2 - Asian markets jumped as U.S. politicans sealed a last-minute deal to avert a punishing combination of tax hikes and spending cuts -- but analysts warn other precipices lie in wait.
Now, about that Satan Sandwich...

After fiscal win, Obama warns Congress on debt fight
WASHINGTON | Tue Jan 1, 2013 11:51pm EST
(Reuters) - Speaking after winning a "fiscal cliff" victory, President Barack Obama vowed on Tuesday to avoid a repeat of last year's divisive fight with Congress over an extension of the nation's borrowing authority.
Let's hope he can do what he says, or back into recession we go, fiscal bluff deal or not.

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