Welcome to Capital Account. Bloomberg reports that UK prosecutors are ready to arrest former traders and rate setters at UBS, RBS and Barclays over their role in the LIBOR scandal. We ask Michael Maloney, founder of Gold-Silver.com, if the larger crime is not LIBOR manipulation, but the ongoing war against the price mechanism itself through reckless central banks and fiscally irresponsible governments.
Today, House Speaker John Boehner and President Obama each outlined plans for reducing the national debt, setting the stage for a contentious debate over the looming 'fiscal cliff.' This morning Boehner announced, “I outlined a responsible path forward to avert the fiscal cliff without raising tax rates.” A few hours later, Obama told reporters “If we’re serious about reducing the deficit, we have to combine spending cuts with revenue. That means asking the wealthy to pay a little more in taxes.”
It seems politicians are nowhere near reaching a compromise anytime soon. Would it be so bad if the US fell off the fiscal cliff? According to a new Congressional Budget Office report, the impact from the spending cuts and tax hikes would be a recession in the US economy next year and an increase in the jobless rate from 7.9 to 9.1 percent by the end of 2013. A deal to avert this would mean $503 billion dollars more in deficit spending for fiscal year 2013. We talk to Mike Maloney of Gold-Silver.com about what the fiscal cliff would entail for the long-term picture of the US economy, and if going off the cliff could at least be a wake-up call for politicians to finally take action.