The Fiscal Cliff & Financial Armageddon

“Fiscal cliff” is a term sometimes used to describe the conundrum that the U.S. government will face at the end of 2012.


Basically we can have tax increases and spending cuts  or we can have smaller tax increases and fewer spending cuts and just borrow more to make up the difference, thus going even deeper into debt than we are now.  (Some call the first choice the fiscal cliff, while others say the either/or nature is the fiscal cliff.)

Or we can forge some type of compromise to keep from going over the edge of the cliff. 

The first choice increases the possibility of a recession because it will depress economic growth.  The second choice increases the likelihood of a financial crisis similar to that being experienced by some European countries, most notably Greece.  (Though others are not far behind.)


Armageddon, according to the Bible is the site of an epic battle as the end of the world approaches.  It is now often used to refer to any end of the world or end of an era event.  The 1998 movie of the same name starts with this theme.

Thus, I use the term Financial Armageddon to denote the end of the United States financial system as we know it today.  A growing number of economists are writing that we cannot sustain our economy (and perhaps our whole country) with the ever growing public debt.  Someone needs to be paid interest and someone needs to be repaid for the billions and billions (read that as trillions) of dollars we are spending as a country.

When this will catch up is open for debate, but catch up it will.  Greece, Spain and other countries are in the midst of their financial Armageddon right now.  It is not an abstract concept!! It is important that we elect those who understand the importance of not continuing to increase our public debt.

 But. and here is the kicker, because our public debt is already so great, even the first choice (which can lead to recession) could ultimately also plunge us into a Greek style financial crisis.

              Click here   for a story from the New York Times about hunger in Spain.  They are fast approaching their Financial Armageddon.  You'll find the paragraph below part way into the story:

As Spain tries desperately to meet its budget targets, it has been forced to embark on the same path as Greece, introducing one austerity measure after another, cutting jobs, salaries, pensions and benefits, even as the economy continues to shrink.

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