7/30/2019 Cliff Hanger - The US Fiscal Cliff
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Cliff Hanger: The US Fiscal Cliff
Matt Brennan
The Greatest cliff hanger of all time arguably involves Mufasa
and Scar in the Walt Disney classic, The
Lion King, where after rescuing Simba and narrowly avoiding
being crushed by a herd of Wildebeesthimself, Mufasa is now
dangling precariously at the top of a cliff with scar being his
only possible
salvation from death. All essential elements of a cliff hanger
are present; a captivating lead up to the
climax, genuine concern for Mufasas wellbeing, and the distinct
possibility that the outcome could
go either way.
Life is imitating art, where the US as Mufasa, finds itself on
the brink of a very steep fall. But first,
here is a bit of necessary background on the US fiscal cliff.
The US fiscal cliff is the result of the
economic mentality of the US, who prefer not to cut their way
out of debt, but to grow their way out
of it. It would be fair to say America is experiencing a fair
bit of growing pains at the moment, but US
analysts deem this quite normal behaviour and refer to this
phenomenon as kicking the can downthe road. This is opposed to
European austerity measures of completing stopping the economy,
suffering the consequences and then dealing with the can.
There is a well-known saying that if America sneezes the rest of
the world catches a cold. Well at
present the US has the H1N1 strand of bird flu, so there is
genuine interest from the rest of the
world in regards to Americas wellbeing. The lead up to the US
Fiscal cliff has been nothing short of
traumatic; with the 9/11 attacks and the GFC being the initial
reasons why such aggressive tax cuts
and spending packages were introduced in the first place. And
fulfilling the third criteria of a cliff
hanger, there is also the distinct possibility that America will
allow itself to fall of the cliff. Barrack
Obama must make a decision on Americas economic future by
midnight 31st
December and hisreluctance stems from the fact that in order to
avoid economic suicide, the US must continue to
tread their current path of budget deficits and indeed grow
their way out of this quagmire.
Unlike The Lion King, the US fiscal cliff also has a love
triangle involving the US, Australia and China.
Australia has wedded itself to these two powerhouses of the
world ever since the Howard
administration decided to shift the countries decision making
horizon away from the UK. Whilst this
polygamy involving US-Australia-China relations in the past has
been largely beneficial for all
concerned, the present concerns of an American demise let alone
a recession if they do indeed fall
off the fiscal cliff, is stagnating all three economies.
At this point, Australia could dream of starting a new life and
eloping with China on the condition
that China renounces its ties with the US by unpegging their
currency (the Yuan) from the US Dollar,
and who knows Australia could live somewhat happily ever after.
More likely, Australia will remain
faithful (for better or worse) to the US, knowing that the US,
in some complex Dr Jekyll and Mr Hyde
plot twist to The Lion King, has Barack Obama playing the role
of both Scar and Mufasa, and he
carries the weight of the nations destiny on his shoulders.
Looking at the US fundamentals, they
arent actually that bad, as the US has a strong median income,
unemployment is near 44 month
(from the November data) lows, there is cheap borrowing capacity
and they are still the innovation
centre and magnet of the world.
