On Monday December 3, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.
Listen to the show.
Part 1 (13:19)
Ryan and Louis discuss the fiscal cliff. Ryan predicts that they will “kick the can down the road”. Ryan notes the proposal by Treasury Secretary Geithner made on behalf of the President to allow the President to unilaterally by pass Congress and raise the debt ceiling.
Louis notes that such a proposal is unconstitutional as Congress is in charge of the allocation of spending.Louis notes that politicians do not want to spend money responsibly but rather want to blame someone else for any cuts in spending. Louis describes the current situation as a “splendid mess”
Ryan notes that news of the fiscal cliff dominates the news cycle but was not mentioned at all during the Presidential election.
Louis notes that even if the fiscal cliff is not avoided and a deal not struck, it will be soon. Louis predicts that even if the tax increases kick in automatically the IRS may not take out the increased with holdings while Congress comes up with a tax cut and that Congress would re-institute any spending cuts.
Louis notes that fiscal cliff will be avoided one way or another and that the deficit will not be cut in any meaningful way.
Louis notes that with the massive amount of US debt there may be no point in either cutting spending or raising taxes as the bulk of the deficit will be covered merely by printing money.
Louis notes that taxing the rich is a sticking point for the Democrats and the President which indicates that people would rather see the money of the wealthy in the hands of the government even if there is waste fraud and abuse in the government.
Louis notes that its possible when you raise tax rates you could lose tax revenues as the rich may invest less in their businesses less and make less money so overall they will be fewer dollars in taxes.
Louis notes that the Fed not only prints money to pay off foreign creditors and investors but also prints money to buy US treasuries to fund the US deficits.
Louis notes that the Fed is not just the buyer of last resort of US treasuries but increasingly the only buyer as they are not buying 70%+ of all US treasuries with money printed out of thin air.