You have probably already guessed that this article defines the “fiscal cliff.” We at Palm State Mortgage Company have heard the term tossed around in conversations and on television, but it is a real term in the financial world.
Just in case you are unaware of this term, or mystified by it, Palm State Mortgage would like to give you a little bit of information about it. Simply stated, a fiscal cliff occurs when there is a special combination of financial events occurring simultaneously:
The Set-up
1. Currently the timing is perfect for a trip to the “cliff” because several significant tax cuts are expiring.
2. At the same time, according to Forbes Magazine, “across-the-board government spending cuts have been scheduled to become effective Dec. 31, 2012.”
The Feared Consequences
Some experts labeled these two simultaneous conditions “a cliff” because they believed that, “if the federal government allowed these two events to proceed as planned, they would have a detrimental effect on an already shaky economy.” Click here to read more in depth details.
1. With these facts in play, several analysts believe the economy could be thrust into another recession.
2. Such an economy would decrease household incomes. Unemployment rates would be increased.
3. Also, they predicted that the “cliff” would demoralize consumers and investors.
4. Meanwhile, some economic specialists forecast that going “over the fiscal cliff would significantly reduce the federal budget deficit.” Click here for more information.
They used the word “cliff” because they thought that the changes would go into effect dramatically and immediately, like walking off the proverbial cliff.
Other policy and economic analysts have stated that the financial consequences might move quite slowly. They also believe that certain points like the tax increases could be subject to change and reversal.
It remains to be seen whether Congress and the Administration make some economic changes in time to pull us back from the edge of the cliff.
Click here to take a look at a CNN report to see a list of the tax exemptions that will expire, or have already expired. You will also find this information boiled down into some impressively crunched numbers.
One thing is certain, only time will reliably reveal what will happen as we face the financial future and the mountainous economic challenges ahead of 21st century America.
We will be updating you concerning the effects the fiscal cliff will have on the mortgage terrain, as we watch this story unfold.
Meanwhile, there could be no better time to pause and wish you and your family a great upcoming Thanksgiving Holiday.
This historic American Holiday can be traced to the year 1623. After the harvest crops were gathered in November 1623,
Governor William Bradford of the 1620 Pilgrim Colony, “Plymouth Plantation” in Plymouth, Massachusetts proclaimed:
“All ye Pilgrims with your wives and little ones, do gather at the Meeting House, on the hill… there to listen to the pastor, and render Thanksgiving to the Almighty God for all His blessings.”
