Wall Street heads for longest losing streak in three months
Stocks fell on Friday, putting the S&;P 500 on track for a fifth straight decline, as President Barack Obama and top congressional leaders were set to make a last-ditch attempt to steer the country away from severe fiscal austerity next year. Obama and lawmakers from both political parties will meet at the White House on Friday afternoon for talks in an effort to agree on a solution before a New Year's deadline to keep large tax hikes and spending cuts from taking effect. Economists say that combination of automatic higher taxes and lower government spending - known as the "Fiscal Cliff" - could push the U.S. economy into a recession.
Wall Street ends sour week with
5th straight decline
NEW YORK |
(Reuters) - Stocks fell for a fifth straight day on Friday, dropping 1 percent and marking the S&P 500's longest losing streak in three months as the federal government edged closer to the "fiscal cliff" with no solution in sight.
President Barack Obama and top congressional leaders met at the White House to work on a solution for the draconian debt-reduction measures set to take effect beginning next week. Stocks, which have been influenced by little else than the flood of fiscal cliff headlines from Washington in recent days, extended losses going into the close with the Dow Jones industrial average and the S&P 500 each losing 1 percent, after reports that Obama would not offer a new plan to Republicans. The Dow closed below 13,000 for the first time since December 4.
"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, managing partner at Direct Access Partners LLC in New York. "He's going to force the House to come to him with something different. I think that's a surprise. The entire market is disappointed in a lack of leadership in Washington."
Allen West: Obama Living In Fiscal 'Fantasy World'
http://www.huffingtonpost.com/newsinc/landing_page.html?vid=517626431&sitesection=huffingtonpost_pol
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Pessimism continued after the market closed, with stock futures indicating even steeper losses. S&P 500 futures dropped 26.7 points, or 1.9 percent, eclipsing the decline seen in the regular session.
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....
"We've been whipsawing around on low volume and rumors that come out on the cliff," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia, who helps oversee $7 billion in assets.
With time running short, lawmakers may opt to allow the higher taxes and across-the-board federal spending cuts to go into effect and attempt to pass a retroactive fix soon after the new year. Standard & Poor's said an impasse on the cliff wouldn't affect the sovereign credit rating of the United States.
....
Highlighting Wall Street's sensitivity to developments in Washington, stocks tumbled more than 1 percent on Thursday after Senate Majority Leader Harry Reid warned that a deal was unlikely before the deadline. But late in the day, stocks nearly bounced back when the House said it would hold an unusual Sunday session to work on a fiscal solution.
Positive economic data failed to alter the market's mood.
....(Reporting by Ryan Vlastelica; Editing by Jan Paschal)
http://www.reuters.com/article/2012/12/28/us-markets-stocks-idUSBRE8BG0D620121228
Fiscal Cliff 2013: A Timeline Of America's Long Stumble
By Kevin Drawbaugh
WASHINGTON, Dec 27 (Reuters) - The long, bumpy road to America's "fiscal cliff" on Dec. 31 has been traveled over many years by Congress and a series of U.S. presidents, including Democrat Barack Obama.
Some of the steps taken along the way had good intentions; some had no intention other than to put off hard decisions, while ideological divisions on fiscal policy steadily hardened.
On Thursday, Congress seemed to be headed toward another crucial deadline unable again to do much more than muddle through. And even that might be overly optimistic.
Here is a timeline of how the country got where it is:
* 1998-2001. Economic expansion of 1990s peaks. Government budget in surplus under Democratic President Bill Clinton.
* 2001. Stock market tech bubble bursts. Republican President George W. Bush and Congress enact deep tax cuts. Some Republicans predict cuts will spur economy, pay for themselves. Sept. 11 attacks. United States and allies invade Afghanistan.
* 2002. After four years of surpluses, U.S. budget slips into deficit of $158 billion. Bear market in stocks.
* 2003. United States and allies invade Iraq. Bush and Congress cut taxes further. Deficit grows to $378 billion.
* 2004-2006. Stock market recovers. Deficit shrinks.
* 2007-2008. Housing market bubble bursts. World financial crisis. Stock market crashes. Worst U.S. recession since Great Depression. Unemployment, home foreclosures soar. Bush, Congress bail out big banks. Deficit jumps to $459 billion in 2008.
* 2009. Obama, Congress enact $787 billion stimulus. Recession ends. Stocks bounce back. Deficit hits $1.4 trillion.
* 2010. Obama signs healthcare overhaul. Obama forms Simpson-Bowles deficit reduction panel. Its plan for fiscal reform is largely ignored. Republicans win control of House of Representatives. Obama agrees to extend Bush tax cuts for two years. Deficit shrinks to $1.3 trillion.
* 2011. Congress fights over Treasury Department request for increase in U.S. debt ceiling. Republicans, Democrats make peace by forming "super committee" to examine fiscal reform. Debt ceiling raised. U.S. credit rating downgraded. Super committee collapses. Deep, mandatory budget cuts triggered for 2013. Stock market makes choppy advance. Deficit estimated at $1.6 trillion.
* Spring 2012. Bernanke warns lawmakers of "massive fiscal cliff" at year-end of tax increases and spending cuts.
* Autumn 2012. Economists warn "fiscal cliff," left unaddressed, could trigger recession. Obama reiterates support for keeping Bush tax cuts for all except high-income earners. Republicans support extension of Bush tax cuts for everyone. Deficit for 2012 estimated to shrink to $1.1 trillion.
* Nov. 6, 2012. Obama re-elected, Democrats keep control of Senate, Republicans keep control of House.
* Nov. 29. 2012. After Thanksgiving holiday and weeks of little action, White House releases its first offer in "fiscal cliff" negotiations. Republicans dismiss it.
* Dec. 3, 2012. House Republicans release counter-offer. Democrats dismiss it.
* Dec. 14-17. Obama and House Speaker John Boehner trade key concessions and appear headed for a compromise agreement.
* Dec. 18. Boehner walks away from talks with Obama, saying the president's plan was not "balanced." The speaker says House Republicans plan to pass a "Plan B" bill of their own.
* Dec. 21. Unable to gather enough votes from his own party for "Plan B," Boehner abruptly adjourns Republican-controlled House for holidays. He says Obama and Democratic-controlled Senate must come up with compromise proposal.
* Dec. 27. Senate returns from holiday break with only four days remaining until the "cliff" arrives. House still on break.
* Dec. 31, 2012. If Congress takes no action, Bush tax cuts expire, other "fiscal cliff" elements begin to kick in.
* Early 2013. If no action from Congress, automatic budget cuts set to kick in. Debt ceiling expected to be hit again after Treasury Department runs out of ways to postpone it.
WASHINGTON, Dec 27 (Reuters) - The long, bumpy road to America's "fiscal cliff" on Dec. 31 has been traveled over many years by Congress and a series of U.S. presidents, including Democrat Barack Obama.
Some of the steps taken along the way had good intentions; some had no intention other than to put off hard decisions, while ideological divisions on fiscal policy steadily hardened.
On Thursday, Congress seemed to be headed toward another crucial deadline unable again to do much more than muddle through. And even that might be overly optimistic.
Here is a timeline of how the country got where it is:
* 1998-2001. Economic expansion of 1990s peaks. Government budget in surplus under Democratic President Bill Clinton.
* 2001. Stock market tech bubble bursts. Republican President George W. Bush and Congress enact deep tax cuts. Some Republicans predict cuts will spur economy, pay for themselves. Sept. 11 attacks. United States and allies invade Afghanistan.
* 2002. After four years of surpluses, U.S. budget slips into deficit of $158 billion. Bear market in stocks.
* 2003. United States and allies invade Iraq. Bush and Congress cut taxes further. Deficit grows to $378 billion.
* 2004-2006. Stock market recovers. Deficit shrinks.
* 2007-2008. Housing market bubble bursts. World financial crisis. Stock market crashes. Worst U.S. recession since Great Depression. Unemployment, home foreclosures soar. Bush, Congress bail out big banks. Deficit jumps to $459 billion in 2008.
* 2009. Obama, Congress enact $787 billion stimulus. Recession ends. Stocks bounce back. Deficit hits $1.4 trillion.
* 2010. Obama signs healthcare overhaul. Obama forms Simpson-Bowles deficit reduction panel. Its plan for fiscal reform is largely ignored. Republicans win control of House of Representatives. Obama agrees to extend Bush tax cuts for two years. Deficit shrinks to $1.3 trillion.
* 2011. Congress fights over Treasury Department request for increase in U.S. debt ceiling. Republicans, Democrats make peace by forming "super committee" to examine fiscal reform. Debt ceiling raised. U.S. credit rating downgraded. Super committee collapses. Deep, mandatory budget cuts triggered for 2013. Stock market makes choppy advance. Deficit estimated at $1.6 trillion.
* Spring 2012. Bernanke warns lawmakers of "massive fiscal cliff" at year-end of tax increases and spending cuts.
* Autumn 2012. Economists warn "fiscal cliff," left unaddressed, could trigger recession. Obama reiterates support for keeping Bush tax cuts for all except high-income earners. Republicans support extension of Bush tax cuts for everyone. Deficit for 2012 estimated to shrink to $1.1 trillion.
* Nov. 6, 2012. Obama re-elected, Democrats keep control of Senate, Republicans keep control of House.
* Nov. 29. 2012. After Thanksgiving holiday and weeks of little action, White House releases its first offer in "fiscal cliff" negotiations. Republicans dismiss it.
* Dec. 3, 2012. House Republicans release counter-offer. Democrats dismiss it.
* Dec. 14-17. Obama and House Speaker John Boehner trade key concessions and appear headed for a compromise agreement.
* Dec. 18. Boehner walks away from talks with Obama, saying the president's plan was not "balanced." The speaker says House Republicans plan to pass a "Plan B" bill of their own.
* Dec. 21. Unable to gather enough votes from his own party for "Plan B," Boehner abruptly adjourns Republican-controlled House for holidays. He says Obama and Democratic-controlled Senate must come up with compromise proposal.
* Dec. 27. Senate returns from holiday break with only four days remaining until the "cliff" arrives. House still on break.
* Dec. 31, 2012. If Congress takes no action, Bush tax cuts expire, other "fiscal cliff" elements begin to kick in.
* Early 2013. If no action from Congress, automatic budget cuts set to kick in. Debt ceiling expected to be hit again after Treasury Department runs out of ways to postpone it.
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