What is the fiscal cliff, and is there an analytical analysis of the fiscal cliff in China?

The fiscal cliff refers to the end of the fiscal situation, that is, the increase in tax revenue and the sharp reduction in fiscal spending, at this point in time to enter a sudden contraction. The combination of tax increases and spending cuts has led to a collapse in the fiscal situation, and the debt problem is closely linked to the US fiscal deficit. One of the thorny issues that Obama will face after his successful re-election is the fiscal cliff in the United States.

Its power will reach $800 billion, and the emergence of a fiscal cliff will inevitably lead to an extreme contraction of economic activity in the United States.

Many people mistakenly think that the fiscal cliff is a huge fiscal deficit, but this is not the case.

Because on January 1, 2013, a series of policies in the United States** will expire, including tax increases and sharp cuts in fiscal spending. When economists comment on the U.S. fiscal cliff, they generally include four things: the Bush Jr.** tax cut plan is about to expire, the 2% personal income tax "holiday" is coming to an end, the extended unemployment benefits are about to expire, and if Congress does not meet the "deficit reduction target set by the Super Committee, according to the Budget Control Act, the United States will start an automatic deficit reduction mechanism in 2013 -- that is, cut defense and other security spending and other domestic projects in a total of about one trillion dollars within ten years."

Fiscal spending is critical to U.S. economic growth, and the expiration of these policies amounts to tax increases and cuts. Contractionary fiscal policy, while helping the United States reduce its fiscal deficit, is likely to stifle the economic recovery.

In short, the fiscal cliff is a series of policies that have led to a significant reduction in US fiscal spending, and a hard deficit reduction will be detrimental to economic growth.

Hope it will be useful to you

The fiscal cliff is chaired by the Federal Reserve"Bernanke"It is proposed that at the end of 2012, the expiration of the US tax cut policy and the activation of the congressional deficit reduction mechanism will cause a sudden contraction in fiscal spending, reduce the amount of employment and investment in enterprises, and increase the taxes to be paid by the people. At that time, there were four fiscal policies for the fiscal cliff master: 1

The tax cuts enacted during the Bush administration expired; 2.Expiration of the 2% payroll tax relief measure & expiration of the extension period of the unemployment compensation measure; 3.The New Medical Tax (DOC FIX) Act expires; 4.

Initiation of measures to automatically reduce fiscal expenditures (deficit reduction mechanism). Because of the impact of the above four fiscal policies, especially due to the activation of the automatic deficit reduction mechanism, the 2013 deficit chart will fall like a cliff, hence the name fiscal cliff.

Reference: Qifu Zao Late Arrival Webpage.

What is the U.S. Fiscal Cliff? A detailed description of the U.S. fiscal cliff. The fiscal cliff in the United States is not a problem, and if it is a false proposition, it will really surprise the market. The reason is simple, the psychology of market speculation is too much compared to risk assessment.

We know that the market is widely expecting a high probability event of the fiscal cliff, but no one can deny that it will not happen. It is no exaggeration to say that no authoritative assessment agency or financial bank can estimate the risks it brings to the world. At that time, the world financial trading market showed a trend for several consecutive days, and it could not be eased for several weeks and months.

This is not dangerous language, but is determined by the position of the United States as a political and economic hegemon in the world, with unimaginable risk implications. Therefore, from the perspective of the trading principles of international investment, the risk evaluation of any trading variety is the first, due to the huge amount of funds, all transactions cannot be completed in a short period of time, and when immeasurable risk events occur, the loss and damage caused by this risk can only be minimized. On the other hand, the speculative psychology of the market fully manifests the gambling trading behavior among large and small traders, who want to take advantage of this opportunity to take away the cake of the market because there are optimistic expectations.

There are two possible types of market trends. One is a wide range of vibrations, large **, its trading behavior can not withstand any wind and grass. The most typical example is the market movement in the United States before and after the elections in early November, which I clearly remember for gold and the dollar at the same time.

The other is the ** trend, the former is dominated by speculative factors, and the latter is dominated by risk avoidance. However, due to the disproportionate nature of speculation and risk, the market is the first to exit the outlook as it reaches the tipping point of the fiscal cliff. The risk is too great, and the final choice is to avoid the risky trading action, even if the probability of occurrence is low.

Between rationality and madness, I believe that international crocodiles will choose the former. Because this is a market investment, not a play!

Observing the development trend of various trading varieties in the past two days, everyone feels strange, the US dollar**, the euro**, oil**, **and** did not follow up, on the contrary, the US dollar**, my opinion is that the market is worried about the risk of the fiscal cliff, and actively avoiding the risk is a short-term behavior, not a long-term **. Conversely, why is the euro rising in price now? Among other factors, because he does not have a fiscal cliff problem, it is relatively safe for speculative trading in the market in the short term.

The European debt crisis has emerged, and the fiscal cliff is not known to have occurred. If the European debt crisis slowly cuts the flesh with a knife and suffers in pain, once the US fiscal cliff occurs, it instantly breaks its arms and legs, and dies unconsciously, now think about why the dollar is so large for no reason that it is not a disaster caused by the fiscal cliff? It is believed that once the US fiscal cliff problem is resolved, the phenomenon of the dollar and **simultaneously** is likely to reappear.

For example, our country will have a national debt balance management, in fact, every country is the same. At that time, for example, in the United States, fiscal expenditure far exceeded fiscal revenue, and it had to rely on deficits to issue bonds, but its debt scale was close to the upper limit, and it would exceed it if it borrowed again. This situation is called the fiscal cliff.

The term fiscal cliff was first proposed by Ben Bernanke, chairman of the Federal Reserve of the United States, which means that by the end of 2012, the preferential tax cuts in the United States will expire, and Congress will also start the deficit reduction mechanism, which will cause a sharp contraction in fiscal spending, and the US fiscal deficit will plummet like a cliff in 2013, which is called a fiscal cliff.

There are four main types of fiscal policy related to the fiscal cliff: George W. Bush Jrbush) expired at the end of 2012, the 2% income tax reduction and unemployment compensation policy extension expired, the new health tax bill (DOC fix) expired, and the deficit reduction mechanism was put on the road.

If the U.S. fiscal deficit falls sharply, it will sharply reduce the employment and investment power of companies, personal consumption will also fall, and the burden of private taxes and health care will rise.

The fiscal cliff is seen by the market as the trigger for the next economic crisis after the European debt crisis. International Monetary Fund (IMF) Chair Christine Lagarde, Bernanke and US Treasury Secretary Timothy Geithner have all warned about this.

The so-called "fiscal cliff" refers to the huge fiscal problems that the United States is currently facing, also known as the US fiscal cliff, that is, the huge fiscal gap that the United States may have by the end of this year and early next year due to the expiration of new spending plans and tax cuts. International Monetary Fund (IMF) Managing Director Christine Lagarde has said that the US "fiscal cliff" is the number one risk to global markets, and that the US fiscal deficit and debt as a percentage of GDP are actually worse than the eurozone.

At present, the United States has a serious imbalance between fiscal revenue and expenditure, spending more and earning less, and it has also issued a lot of treasury bonds, and once the dollar system collapses, that is to say, the dollar continues to depreciate, there will be a worldwide economic crisis.

The "fiscal cliff" in the United States mainly involves four issues: the expiration of the tax relief measures of the former Bush in the United States; the expiration of the 2% payroll tax relief; expiration of the extension period of unemployment compensation measures; and if Congress fails to reach an agreement to meet the Super Committee's deficit reduction target, the automatic spending and budget cuts authorized by the Budget Control Act will come into effect.

All of the above measures involve about $500 billion, or about $500 billion of the gross domestic product of the United States. At present, the U.S. economic recovery is still faltering, with a growth rate of only about 2%. The impact of the "fiscal cliff" on the economy can be imagined.

Hit the U.S. economy hard.

The U.S. Congressional Budget Office** said that if Congress cannot agree on the "fiscal cliff", the U.S. economy will shrink in 2013; By the end of 2013, the unemployment rate will rise from the current level to; The 2013 fiscal year, which begins in October this year, will also grow at a rate of only one year, when the U.S. economy may fall back into recession; And if the tax cuts are extended and the spending cuts alarm is lifted, the U.S. economy will grow by 3% in 2013 and the unemployment rate will be close to 8%.

The Fed believes that if Congress fails to agree on a federal budget reduction plan, the US fiscal situation will tighten sharply starting in 2013, causing companies to delay hiring and investing, which in turn will drag down the economic recovery.

Gross, the founder of Pacific Investment Management, warned clients that Washington would only slightly delay tax hikes and spending cuts, describing the "fiscal cliff" as dangerous, like the Grand Canyon in the United States.

O'Neill, the father of the BRICS and chairman of Goldman Sachs Asset Management, said that the concerns triggered by the political impasse have exacerbated the downside risks in the market, and the global and American people hope that Washington can be reasonable.

Rating agencies Moody's and Fitch have warned that the U.S. credit rating could be downgraded if Congress fails to resolve the "fiscal cliff" and debt ceiling issues. Both rating agencies currently have a negative outlook for the United States.

Bank of America Merrill Lynch economist Ethan Harris said, "The looming 'fiscal cliff' will plunge the economy into a deeper recession than expected." The impact of the fiscal cliff on the economy is not only to create uncertainty, but also to exert contractionary pressures. If we're going to go through a fiscal cliff for a long time, there's a good chance of a recession. ”