I'm one of the ones who lost their job as a result of the subprime economic collapse that lead to what is now called the Great Recession (2008-2012); it might just as well be called the Great Foreclosure. Now I'm very worried about what might happen in Washington regarding the upcoming potentiality of what is being called the "fiscal cliff."
Defining Fiscal Cliff
Some economists see the looming fiscal cliff in terms of the impersonal economy that, they say, must have cyclical rises and falls in order to keep a realistic economy and price index. Other economists see the looming cliff in terms of individuals' jobs, income and homes. This latter group of economists is opposed to letting the cliff become reality while the former group favors an economic dive over the cliff.
If I were an economist, I'd be in the second group because, having lost a job already because of our negative economy, I surely do not want to go through that again nor do I want to see anymore of my neighbors go through that again nor do I want to see anymore of my neighbors sitting out on boxes of their belongings while strangers from the local labor exchange take it all and put it in a truck.
Washington Cliff Negotiations
The Obama plan is to increase the tax on income after the first $250,000 of income. This will end George Bush's tax cuts for those with income above $250,000. A tax increase in this bracket would add revenue to chip away at the Federal debt. What politicians like John Boehner (R) are worried about is that the top brackets would be hurt so much that jobs would be lost and expansion would contract (and they're worried about their promises to retaliatory Grover Norquist)..
Hmm ... sounds a lot like what the rest of us, below $250,000, are worried about should we plunge over the fiscal cliff with the top brackets untaxed. I was employed by a rising growth company. The company's venture capital got pulled out in one of the early waves of the Great Recession. Most of us are employed by small to medium sized companies that will be hard hit by loss of government spending and by increase in their taxes. Yeah … I'm still more worried about what will happen to my job and rent money if our feet go off the cliff than I am about what will happen if the $250,000 and above (note the "and above" part) earners get taxed.
Price reality and Rental Bubble
The one thing I know is that when the economy had its most recent "correction" in the Great Recession, I had an almost impossible time finding a rental I could afford (the price I got on my modest rural North Eastern property was a laughable down payment in my home state of California to which I had returned). It was a nightmare being that close to having no options to turn to.
Some economists report newly rising rental prices as good news that the housing markets are "correcting." Consider, in markets where prices were already shockingly over-inflated (East Coast standard minimum of $850 monthly for a studio apartment) and where the recent 4 percent increase in price and population in the rental/renter markets is driving some economists to predicting a rental market "bubble," future hicks to rental prices following a drop off the fiscal cliff must only result in a new wave of homelessness and street dwellers. This cannot be good even if the economy actually does need another recession. I was reminded yesterday that the US Constitution requires government to "promote the general welfare." It is possible to see this as the opposite of endangering the general welfare by promoting impersonal cyclical economic correction.
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