Daily Commentary by Lary Baer: The clock is ticking and the battle lines are
being drawn.
Lawmakers are
returning to the capitol with 48 days left in their self-imposed deadline to
reach agreement on scheduled tax hikes and budget cuts that threaten to plunge
the country back into recession if not modified before midnight on December 31st.
Both sides, Democrat
and Republican, generally agree on the need to avoid the jolt of the $600
billion in draconian deficit-reduction measures they all agreed to in August
2011. They also agree on a need for long-term deficit reduction and
revisions to the tax code.
The two political
camps are at odds over how to get over the immediate crisis, with the main
disagreement focusing on whether to extend tax cuts for everyone or just for
those earning below $250,000.
The longer it takes
the president and Congress to negotiate a deal, the stronger the odds become
partisan politics will grease the skids that send the nation over the brink of
the "fiscal cliff" and into the economic darkness of another job
destroying recession. Such a scenario, should it develop, will
almost certainly produce new modern-day lows for mortgage interest rates -- but
in an environment of sharply declining consumer appetite for mortgage
financing.
The stakes are high. May Divine
wisdom prevail for our political leaders on both sides of the aisle during this
time of great national economic peril.
Looking ahead to the
balance of this holiday shortened week the release of tomorrow's October Retail
Sales and October Producer Price Index followed by the Thursday morning release
of the October Consumer Price Index will serve as the center piece of an
otherwise quiet period for economic news. All three mid-week reports are
broadly expected to be mortgage interest rate neutral.
THE
MARKET IS ALWAYS RIGHT! . YOU AND I ARE SOME OF THE TIME
