Eric Fry and Joel Bowman catch the train of opportunity on their way out of the US
Welcome to Capital Account. As the US ‘fiscal cliff’ approaches, Reuters reports that Republicans are preparing a House vote on John Boehner’s ‘Plan B,’ a plan the Whitehouse has promised to veto. Meanwhile, credit ratings agency Fitch has warned the US could lose its AAA credit rating if Washington doesn't reach a deal to fix its budget problems – as we like to call it, our ‘econorrhea.’ As we watch this ‘fiscal cliff’ charade, it brings back memories of the 2011 debt ceiling debate, when lawmakers were bickering and ratings agencies were threatening to downgrade the US. And after Moody’s downgraded the AAA credit status of the US, there was much fanfare.
But there were few direct consequences, as the dollar has strengthened against other currencies since and the US continues to borrow at record low levels. So, might the ‘fiscal cliff’ turn out the same way? But when world-shaking events do happen, we can’t predict what they will look like – we often have a hard time believing they’ll happen in the first place! When preparing for these events, the ‘prepper’ is often seen as a Chicken Little. People who bought generators and stocked up on food in the northeast seemed a bit paranoid, until we saw reports of Hurricane Sandy causing destruction never seen before in America's largest city.
Our guest, Eric Fry of the Daily Reckoning, compares it to waiting for a train that may never come, but if you miss the train, the opportunity is gone. And guest Joel Bowman says he can't wait to see that fiscal train go right off the cliff of state – the sooner the better!