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“Fiscal Cliff” Affects Area Stockholders

Political showdown over taxes and budget cuts impacting local investors

MOLINE, Illinois - The so-called "Fiscal Cliff" talks between the Republican controlled House and the Obama White House is already having an impact on area stockholders.

Stocks dropped more than 300 points on the day after elections in part because a Democratic president won re-election and Republicans kept control of the House.

The "Fiscal Cliff" is a combination of deep budget cuts and expired tax increases which neither party favors but both agreed to during the summer as an incentive to reach a budget agreement before the first of the year.

Congress returns to Washington this week to start work with the White House to come to an agreement.  But after that, this Spring, Congress will need to vote on another increase of the debt ceiling which means another financial showdown could be just around the corner.

Could there be a crisis every four months?

"We might, unless we get this permanently dealt with", says investment counselor Phil Kassewitz.  Kassewitz talked live to us on "Good Morning Quad Cities" Monday.

"That's where I think discussions need to go and I think this week will be the start of that and the tone is going to be very, very important and the markets are going to react to that."

Kassewitz says the markets would probably react favorably to a move made by House Speaker John Boehner.  Boehner has suggested a freeze in the status quo and a move to find an agreement in a year.

"I think Wall Street would like to see that."

 

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