Consumers feeling fear of fiscal cliff

The macro concerns are finally reaching everyday Americans.

By Jim Cramer Dec 13, 2012 10:28AM

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MedioImages CorbisWas Wednesday the day when it dawned on people that without a deal, consumers could be in real trouble? Was it the day when it hit the market that the regular guy is concerned?

 

I have to tell you that the comments from Wal-Mart (WMT), on top of the comments from Dollar General (DG) Tuesday about gross margins, tell me that everyday Americans are now starting to figure out they have to be worried, even if they are not sure exactly what to be worried about. They know we have a big budget deficit. They know, as they did when the debt-ceiling crisis occurred, that something bad is going to happen, and they know it might be something bad happening to them.

 

So that's who pulls back.

 

We may now be past the point of who is to blame and more to the place of "I don't care who is to blame -- do something." That's why, contrary to many people, I was quite contented with what Ben Bernanke is doing (read on TheStreet). He knows that sudden austerity is coming, and the last thing the country needs is a guy who is going to raise interest rates now because we had some good housing data. I think he recognizes how fragile the construction and auto rebounds are, and he needs to send a signal that he is not a Jean-Claude Trichet figure who wants to start raising rates as soon as possible.

It drove me crazy to hear so many people talk about how the real problem now is how Bernanke will get out of this position when things get better.

 

To me, what's pertinent is who is going to hire if everybody gets a tax increase and if instant and stupid spending cuts cause 2 million jobs to be lost.

 

Bernanke knows that austerity is good incrementally but hideous all at once and without thought. That's why he coined it a fiscal cliff, for heaven's sake. So don't blame him. He knows that consumer and business confidence is falling. He knows the cliff is coming.

 

He just wants to make the landing as gentle as possible, although when you jump from a cliff without a rope, the results tend to be less than optimal.

 

Cramer's face 

 

Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.

 

 

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204Comments
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This puts things into a much better perspective.

Lesson # 1:

* U.S. Tax revenue:       $  2,170,000,000,000
* Fed budget:                 $  3,820,000,000,000
* New debt:                    $  1,650,000,000,000
* National debt:              $14,271,000,000,000
* Recent budget cuts:   $        38,500,000,000

Let's now remove 8 zeros and pretend it's a household budget:

* Annual family income:                                        $  21,700
* Money the family spent:                                     $  38,200
* New debt on the credit card:                             $  16,500
* Outstanding balance on the credit card:          $142,710
* Total budget cuts so far:                                    $     38.50

Got It ?????

 

OK now,

Lesson # 2:

Here's another way to look at the Debt Ceiling:

Let's say, You come home from work and find

there has been a sewer backup in your neighborhood....

and your home has sewage all the way up to your ceilings.

What do you think you should do ......

Raise the ceilings, or remove the shlt?

Dec 13, 2012 11:48AM
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People may say they understand and fear the fiscal cliff, but I doubt that most do.  What people fear is what they see - namely unemployment, underemployment and inflation in the prices of food and energy and basic essentials.  If they have a job, their pay isn't increasing nearly as fast as the cost of gas, heating oil, milk, peanut butter, etc...  They are fearful because it now costs more than $400 to buy an average set of new tires for an average passenger car.  They are fearful because it now costs more than $100 to replace a car battery.  They are fearful because propane is now $3/gallon or because many of them have to work a half a day just to fill up the gas tank in their car.  People are fearful because many of their hours at work are being cut because of Obamacare.  They are fearful because they still owe more than their houses are worth.  They are fearful because with rock bottom interest rates, there's no point in putting a little money aside in the bank for a rainy day.  They are fearful for their children's future because tuition costs are going up by 10% a year in many places.  And they are fearful because all they ever hear out of Washington anymore is blame, class warfare rhetoric and  fear mongering.

Dec 13, 2012 12:58PM
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Thumbs up if you really don't want to send 20 F-16's to Eygpt as part of an aid package.
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I still haven't bought the first Christmas present yet. Need to worry about food and gas first. The middle class always suffers the most, it will continue into 2013.
Dec 13, 2012 11:55AM
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I think every American person is tired of the Rebublicans and Democrats fighting over this fisical cliff!! These people we voted in are a embarrassment to our country as a whole. they should go down in history as our worst representation our country has ever had. Period!!! Five guys off the street could have settled the fisical cliff in two days!!!
Dec 13, 2012 11:09AM
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BoBo you do know that when we go over the cliff a whole bunch of people on extended unemployment will be shut out and not counted. This will result in a false reading of improved unemployment. That was one of Bennie's triggers to stopping all the QE flow.

 

Think man.... don't just spew crap.

Dec 13, 2012 12:06PM
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I am in the group of people who think the fiscal cliff is needed. The majority of the people in this country that voted evidently have not been paying attention. The president or the republicans have NOT proposed any significant spending cuts to date. The 16 trillion dollar debt is not going away anytime soon and it is obvious that raising rates on the top 5% will not even put a scratch on the debt. The eventual outcome of a deal between the two parties will be increasing government spending and eventual bankrupcy for the country. Our children and grandchildren will be paying for the excessive nanny state spending for decades, while the fools in D.C. haggle over pennies. Maybe we ought to offer the Chinese the state of California in exchange for the money we owe them?
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When does unemployment end for these people? Is it forever? Nothing makes someone go get a job (Even if it's not one they WANT) better than no more help. If you keep getting a check, where's your motivation?
Dec 13, 2012 12:35PM
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The new claims came in lower today. The numbers are being hailed a a huge improvement. May I caution that we now have a much smaller universe of employed as the worker participation rate has declined precipitously over the past several years. Thus these numbers must be held up against a smaller workforce and are understated proportionately.  
Dec 13, 2012 2:09PM
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One thing that the American people need to understand is the simple truth that parties don't last forever. And that the piper must be paid. 

For the past 30+ years Americans - both government and private citizens have been gorging on cheap debt in order to fuel what can only be described as crass consumption. We collectively have mortgaged our future, and that future is here now. The Fed, under Ben Bernanke and his predecessor Alan Greenspan have been the Chief Partyers; keeping interest rates very low and creating enormous amounts of money out of thin air. The huge debt that has accumulated should surprise nobody. Belt tightening will be in our future, whether we like it or not. And this means recessions. Multiples. Over extended periods of time. Y'all better start getting used to it. 
Dec 13, 2012 11:35AM
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i truly doubt the average guy is investing in volumes enough to be "seen" by anyone at the macro chart level of the stock market. 

 

the 401K mutual funds might include a significant amount of average joe money, but it's in the hands of the masterful fund managers - so THEY already know all this, right? 

Dec 13, 2012 1:53PM
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19 DEMOCRATS ARE NOW TRYING TO STOP OBAMACARE! THEY WANT IT REPEALED! THEY

WANT THE DEATH PANEL STOPPED! THEY WANT IT CANCELLED! WHY NOW? THEY GOT

RE-ELECTED AND NOW SEE IT WILL DESTROY THEIR STATE AND ECONOMY AND HEALTH

CARE? THEY KNEW WHAT WAS IN IT AND VOTED FOR IT ANYWAY! NOW PEOPLE LIKE ME

ARE ALREADY SUFFERING WITH HIGHER RATES AND SERVICES CUT AND TAX HIKES!

THANKS YOU STUPID LIBERAL AHOLES! WHY ISN'T THE BIAS MEDIA REPORTING THIS?

 

Dec 13, 2012 12:40PM
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Sounds like enough of everyone is on board for higher taxes on the rich... now if they can just agree to spending cuts it will fly.
Dec 13, 2012 12:26PM
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Consumers fearing fiscal cliff? Hardly. Consumers don't think about such things. Even if they did, it is now falling on deaf ears, as the story has been over-reported for months.

I think the real story is that Cramer shorted some stocks and is now hyping the fear so he can cash in.
Dec 13, 2012 12:51PM
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The fiscal cliff will hit those who depend on the government for their living.

It will take out the takers. not the makers.
Dec 13, 2012 12:24PM
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CNBC strikes again ---- Kaminsky quote "the wealthy are the most generous people in the world" .....

well kaminsky (aka bilbo baggins)  --- do you recall a fellow by the name of madoff -- he was very charitable - problem was he had STOLEN most of that money .....

Btw Harry Reid he said you DO NOT give any money to charity - I am betting you give more than he does so can you please force him to apologise on AIR !!

CNBC says "Rise Above" while they attack one side ....... dooshbags !
Dec 13, 2012 12:26PM
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quote from mirage "Nazi' are SOCIALIST's, hello National SOCIALIST Party...  Socialists are part of the left.  Nazi's went after their Rich class (Jews)...  "

so dumb it needs no comment!
Dec 13, 2012 2:19PM
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YOU CAN'T EVEN CONFIDENTLY PUT YOUR FINGER ON WHAT IS RICH

The top 1% of income earners are paying about 35% of all income taxes.
The top 5% of income earners are paying about 60% of all income taxes.
The top 10% of income earners are paying about 70% of all income taxes.

AND - alot of these "rich" are the capital allocators; you know -- the evil bankers, hedge fund managers, etc.

These same people are globally connected and mobile.
 
Try to think VERY carefully what happens, absent the usual wealth guilt ridden bunch, when you cross the line on higher tax rates.  We don't know where that line is.  However, they evaluate what they do (project analysis) based, in part, on marginal tax rates.  The projects (factories, R&D, service centers, etc) don't have to be placed in the U.S.  AND Neither do the future entrepreneurs or high net worth individuals supporting all this employment.

It is a complete disservice to everyone to call for government financial industry rescues, as Cramer and many posting here did in 2007 and 2008, and then cry for more taxes after the resulting income distribution issues.  This is the kind of citizen/electoral schizophrenia and envy that is going to crunch everyone down.
Dec 13, 2012 2:02PM
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For those of you who are not Trump fans remember the art of the deal.  There are many many factors surrounding this deal nonsense.  I think the grinding people into submission is one part, the weather balloon is another, the self serving attention needed by both sides is another.  The one constant is that these folks created this problem; well along with voters who kept voting them in, and they have to at some point in time "rescue" themselves.  I believe they understand the anger brewing when one Sunday morning real soon they will do what the USSR had to do.  Make the announcement "We are now insolvent and we no longer have the money to continue" and it will be every State for themselves. They did it and are still here.  Although I might add Moscow is now the most expensive city in the world with much hunger, depression, and be described as a stagnant economy for most at best.  This is the real cliff and in time we will visit it.  This is but the precurser and anybody with half a brain should prepare.  There is no viable alternative as far as i can see, NONE!
Dec 13, 2012 1:18PM
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dlh....We shouldn't send anymore weapons to the Middle East.....Friend or Foe...?

 

They always fall into the wrong hands...

 

No weapons of any kind...to anyone.

And apply sanctions to anyone that does.

Or arrest our suppliers and sellers.

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