Avoiding the Fiscal Cliff ...

Anyone remember the debt ceiling crisis of Summer 2011? How 'bout S&P's downgrade of the US government bond credit ratings that followed (first in US history)? Of course, then came the fantastic failure of the Supercommittee and the theatrical set up for the next big (and fantastically titled) economic crisis: the Fiscal Cliff.

The problem is succinctly summarized on beatthedebt.org:

The end of the year will bring what Federal Reserve Chairman Ben Bernanke has termed the “fiscal cliff,” as various tax provisions expire and the $1.2 trillion budget sequester begins to take effect—threatening to remove trillions of dollars from the economy, coupled with an almost certain need to raise the federal debt ceiling.

Obviously, the best way to avoid falling off the Fiscal Cliff is to stay as far away as possible (after all, no one fell off a cliff who never went near one). But to do that, we must get this issue in the public spotlight now by forcing Obamney (that loveable odd couple) to make it a major election year issue.

If you agree, there is one simple thing you can do right now: Visit Debatethedebt.org and sign the petition requesting that "the Commission on Presidential Debates and the presidential campaigns to commit to dedicating one of this fall’s debates to a forum in which the candidates present and defend their plans and discuss what trade-offs they are willing to accept to achieve the necessary savings."

And, of course, keep spreading the word ... Let's really show those recalcitrant prima donnas in Washington that this is a problem "We the People" want resolved.

Small Enough to Fail

In today's Financial Times, a contributing editor called for governments to instigate a modern-equivalent of the trust-busting of Wilson and Roosevelt:

Rather than jury-rigging the existing system, or falling back on meaningless calls to change 'culture,' political leaders need a modern version of Woodrow Wilson’s dictum. Where Wilson was for business but against monopolies, today’s leaders must be for finance but against banking behemoths. The instruments of finance, from risk models to derivatives, are useful when used responsibly. But the structure of modern finance – vast institutions that borrow cheaply because taxpayers are on the hook to save them – is an abomination that must stop.

In 2011 the hedge fund manager John Paulson lost more money than JPMorgan’s London unit. Regulators didn’t worry, because his private partnership is not too big to fail. We need a system in which more institutions resemble Mr Paulson’s: simple enough to be manageable; focused enough to avoid conflicts of interest; and small enough to fail.

Well said, FT.