There's no question that had today delivered a 300 point decline for the Dow, you'd have received one audio commentary, and at least one written, where I would have entirely dismissed today's drubbing as a long-term non-event. Ah but what about today's 300 point rally? Well, as much as I'd love to tell you that 2013 is off to the races, that today's rally is indeed an event, and that you'd be wise to race on in with that hoard of cash you've stuffed under your mattress, I can't. For if the dealmakers were, as the consensus suggested, destined to deal regardless---whether it be today or a month from today---a game-changer this ain't. That said, while I can't have you feeling good about the market because of yesterday's deal, I can, however, have you liking the market for reasons I spelled out in Our View Going Forward.
As for the ongoing raise-taxes-versus-cut-spending-to-tackle-the-deficit-debate, here's a little commonsense from an essay featured in my forthcoming daily devotional Leaving Liberty? (I know, shameless self-promotion):
DAY 7: Dude, We Need to Put You on a Diet (November 2011)
Dudes we have to cut spending.
Theres this raging debate, with regard to the federal budget deficit, shaking the walls of our nations capitolone side argues for spending cuts, the other for tax increases. Lets see how the arguments stack up against a little everyday commonsense.
So the nurse invites you back and asks you to slip off your four-inch-heel boots. You step on the scale, she rests the sliding bar on 261 pounds, you cheat a tiptoe to 59 inches.
Ninety minutes later (youre starving), the doc says, Dude, we need to put you on a diet! (He's a young, hip doc.) You ask, How about diet pills? Doc says, No, I dont like the side effects, and your hearts not sounding so good. Lets see how you do with just cutting calories for a while. You say, No way, Doc! Thats not fair! If you dont give me the pills Im not cutting back on what I eat! Whatre you nuts? cries Doc. Whether or not you get the pills, assuming you wanna live, you still gotta go on a diet!
So our nations frame currently supports $2.2 trillion (revenue) per year. We step on the scale and were at $3.7 trillion (spending). One side says, Dudes we have to cut spending! while the other says, How about we raise taxes? The one side says, Lets see how we do with just spending cuts first (being that the economys been so erratic). The other says, Thats not fair! If you dont give us tax increases, were not cutting a dime! Crazy!