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
Dec 13, 2012 8:35PM
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Sorry Classic.  That "argumentum ad verecundiam" will not hold.
Bush Junior took way more vacations, was off a lot longer
and spent multiples more to take his entire entourage with him.

Your authority is Fox News and those insidious little spam-a-grams
floating around the Email ether, infecting the thought modules in
your mind, dearie.  You must learn to think Outside the Fox!

OB is doing what every other POTUS has done before him,
only less so when it comes to his golfing retreats. 

Dec 13, 2012 8:31PM
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MIRAGE GUY- "My business is totally debt free, and awash in cash."

....So, do you think you could spare a little bit for those 4 people's medical insur....

"NO !!!  I would rather lay them off to prove my point."

Which point is that, exactly MG?  That one where you abhor
"Big Govt" but demand a government that will take care of your
obligations for you?

Obama won; time to move on with what little life you have left, no?


Dec 13, 2012 8:07PM
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Every day I see stories on the news of people experiencing very difficult times. On the same news program I see our government handing out BILLIONS for energy scams, foreign aid to enemies, pork projects in congressional districts that defy logic, government officials making double the wages of the private sector, funding buildings to name after themselves, taking extended vacations etc etc.

People struggling to get by are not analyzing fiscal cliff issues but they are starting to pay attentiion to what our debt and projected increases in current budget proposals mean to them personally. Even the slackers and takers are capable of simple math and realize the source of their entitlements is broke and sinking deeper into an abyss of red ink every day. They dont know what to do about it, but they are wise enough to see the party will be over soon enough.

It is truly a national disgrace to see how we as a nation squander the national wealth on programs that benefit the unworthy while people in NY and NJ huddle in the cold and dark, and how veterans struggle just to get an appointment to voice their needs, and our elected officials live like members of some royal court.

Enjoy your Hawaiian vacation Obama.  

Dec 13, 2012 7:37PM
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IT REALLY IS THAT SIMPLE CONGRESS !!!

...Unless your actual vested interest is in
protecting the 'gains' of the Top Tiers and
enshrining the plutocracy really running
the country. 

Dec 13, 2012 7:23PM
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WASHINGTON -- A Congressional Research Service report that was reissued Thursday after Republicans complained about it before the elections still finds little evidence that the Bush-era tax cuts spurred growth or that hiking the top rates would have more than a "negligible" impact on the economy.

The however, that the lower tax rates in place since 2001 have had a strong impact on increasing income inequality in America.

"Analysis of such data conducted for this report suggests the reduction in the top tax rates has had little association with saving, investment, or productivity growth," the study says. "It is reasonable to assume that a tax rate change limited to a small group of taxpayers at the top of the income distribution would have a negligible effect on economic growth."

The study focused on tax rates and economic growth since World War II. Democrats saw it as a key piece of evidence in their argument that tax rates on the top 2 percent of earners should go back up to Clinton-era levels to help deal with growing debt, deficits and the nearing "fiscal cliff." Republicans have balked, arguing that any tax hikes will hurt jobs and the economy.

"What this report demonstrates is at the core of the debate we're having right now," said Maryland Rep. Chris Van Hollen, the top Democrat on the House Budget Committee, adding that it "put a stake in the heart of the Republican argument that small increases in marginal tax rates for wealthy individuals somehow hurt economic growth."

Dec 13, 2012 7:14PM
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Silver:  This isn't something US debtors or bankers want.  Fitch had said that we if we don't resolve the fiscal cliff we get downgraded.  Any major holder wants this solved and the debt ceiling to be raised because that's how they continue to get their coupon payments.  The recession that would follow the measures outlined in the fiscal cliff would make it harder, not easier, for the US to make these payments putting banks in a worse position.

 

Yes, the fsical cliff is a measure to impose austerity.  But do you remember the source?  The debt ceiling negotiations from 2011 included the GOP looking for austerity measure to reign in the out of control deficits.  If the super congress failed to come up with a conclusion, painful cuts and tax increases happen as a way to punish Congress for not coming up with a reasonable conclusion.  It was suppsoed to be "Look, you really don't want this to happen, so come up with something less painful."

Dec 13, 2012 7:06PM
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Eagle:  Is that why Tea party candidates lost every senate race that wasn't completely safe and the house didn't take any seats?

 

Also, markets left completely to their own accord support corporate expansion and income concetration... or is that what you meant by let the markets do the dirty work?

 

Thing about how large corporations were in the early 1900s and why the Sherman Act was passed to begin with.

Dec 13, 2012 7:03PM
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I see two huge cans  that will continue to be kicked down the road unless drastic action is taken--the national debt of over $16 trillion, equal to or more than our GDP (gross national product--of which 70% is consumer spending) and the IRS Tax Code, all 14,000 plus pages of small print.  Who would have thought that Fed chair Bernanke, hardly one to come up with some metaphor would say "fiscal cliff" last February?   I wonder if he saw Ridley Scott's "Thelma and Louise", out years ago.  "Yippie yippie kye yay" as the two drive off. 
Dec 13, 2012 6:40PM
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Folks,what it boils down to is this. The private banking cartel that is controlling society that calls itself the "Fed" collects interest on every dollar that is put into circulation. Our government has been bankrupt since the 1930's and has accumulated a national debt of over 16 trillion dollars(infinitely more if you count all the money stolen from Social Security the last 30 years). Last year the interest payment on the debt paid to the "Fed" was over 470 billion .The "Fed" is worried that the government with its huge deficits will have trouble making the future payments, especially with the economy collapsing and less tax revenue stolen from  the masses to pay them. That is why this phony fiscal cliff scheme was hatched as an excuse to implement austerity, to make sure the banksters get paid even if it means us getting the shaft. This same scheme is used on many countries worldwide by their central banks,all at the same time. Quite a coincidence, isn't it?

Dec 13, 2012 5:57PM
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When you see that in order to produce, you need to obtain permission from men who -produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but -protect them against you - when you see corruption being rewarded and -honesty becoming a self-sacrifice - you may know that your society is doomed."

Ayn Rand

Dec 13, 2012 5:56PM
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Here in florida we hear that housing jobs ect are getting better. No where in America is it really better,

My neighbor bought her condo in Bal Harbour, FL one block from the Beach in an excellent community for 400 thousand dollars. It is for sale at $245 and cannot get a buyer. The city council keep raising every fee they can dream up making it more difficult.

Driving on Biscayne Blvd today it was bumper to bumper with many of the cars broken down  wrecks driven by ???

Our politicians are all I am told being threatened by Progressives and our constitution is being trashed. The greatest country in history brought down by a minority left who spread weasel juice all over the media. There is no saving us now. Hillary ,Soros and the Obama's win. America

lost.

When you see that in order to produce, you need to obtain permission from men who -produce nothing - when you see that money is flowing to those who deal, not in goods, but in favors - when you see that men get richer by graft and by pull than by work, and your laws don't protect you against them, but -protect them against you - when you see corruption being rewarded and -honesty becoming a self-sacrifice - you may know that your society is doomed."

Ann Rand

Dec 13, 2012 5:45PM
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We have to thank Obama for finally setting up the show down that will flush his compatriots of old Republican guard out.  The local takeovers at the Repub precincts will continue and will soon be filling in the federal seats with true believers in downsizing this government cancer.

The timing working out perfectly.  Over the cliff; Boehner out as Speaker, compromising establishment Repubs scattering like rats, Dems taking ownership and going down with the ship.
What is left?   FREEDOM !

Dec 13, 2012 5:39PM
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I agree HJ, as I said before.  Let the Republicans drive the car over the cliff......they will not see another one of their like occupy the White House for 30 years.  Protecting the top 2% will not win you any national elections.
Dec 13, 2012 5:08PM
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Let's just stop the government from continuing to support the corporate power expansion and income concentration and let the markets do the dirty work.

In 2007 and 2008, the market grim reaper came for GE, GM, Citibank, AIG and even Golden Shower --uhh I mean Goldman Sachs and many others.  Then look what happened.  The 47% joined the fear circus and joined in the chorus for bailouts.

Pass more laws and regulations and the corporations get bigger as the little entrepreneurs cannot deal with the legal and accounting overhead to compete with it all.
Dec 13, 2012 5:07PM
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VoxPopulae

Speaking of stealing money for charity --- you just defined the U.S. Government.
Dec 13, 2012 4:56PM
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DLH.....We could take up a collection for a rug...In the bottom picture..Glue it on, real tight.

Everyone  raise their hands...

Dec 13, 2012 4:34PM
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The whole mess stinks because for many of us its not our fault. I didn't go out and get 2nd mortages on my home to buy cars trucks boats bikes toys etc etc. In fact my wife and I ran the other way and sold while the prices were up and now that everything tanked the taxpayers are ALL getting the bill.

I view the rich as those that are taking advantage of our governments failure to act, not the cause of our problems at least directly. They won't impose tariffs on Chinese goods in an attempt to balance trade...so our trade deficit goes up and up while our mfrg jobs go overseas.

Where I do have a problem, is with those rich/corporations that use their money to make sure the government keeps the table tilted their way. Both the corruptor and the coruptee need to fry in this case, no different than treason imo.

 

Dec 13, 2012 4:30PM
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Beside the looming "Fiscal Cliff" has anyone given credence to Anonymous' pledge to wreck the banking system? Project Mayhem 2012
http://www.youtube.com/watch?v=bqo1hDrj8eY
Dec 13, 2012 3:40PM
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More cheap fear tactics. I say take it over the cliff. Until Boehner 's nutsacs drop and he can stand up to the tea bags, take it over. The Republican caucus, Numerous business leaders, and the American public want compromise. As long Boehner,  his mini me Cantor and the ultimate tool McConnell  are defending the wealthiest, and just the wealthiest, nothing changes. Their 'plan' is ALWAYS attack the middle while keeping up ludicrous spending in the military and making sure people like Romney pay 13% or no tax at all. The majority is polling to blame the Republican's if this ends up in gridlock again. Let them tank it. They can just lose again in the 2014 mid terms.
Dec 13, 2012 3:37PM
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NTU:  Raising the rate that the fed pays on bank reserves.  That slows lending down by increasing the risk free return from the .25% existing now, restricting more high risk lending that has a lower risk adjusted return while allowing safer lending to contiue.  This can limit how quickly money actually gets into circulation without a policy that dramastically slows the economic engine.

 

How do you figure we're involvent by contract? If you mean everything coming in the next 10-20 years in terms of obligations for SS and medicare?  Yes, we need to reform those.  Remove the cap on SS withholdings and add a rationing system to medicare.  What that rationing system is and what standards should be followed?  I don't know, but it's going to be really hard to put that in place.  We're going to need to get a little more accepting of end of life decisions to evern breach that topic.

 

I don't quite know what you mean by interest rates can't be raised due to to contract.

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