As you plan for that autumnesque apple-picking outing this weekend, it is worth considering that the new year is just shy of 90 days away.
Indeed, it’s just an eye blink from Halloween candy to Santa’s sleigh.
What seems like a lot of time is really no time at all.
And at home and abroad, a virtual whirlwind of activity will answer some questions and set the stage for others, making clearer the kind of world we will live in come 2012, and the choices we will have to make.
Consider that within 90 days, we will have a much clearer picture of our nation’s financial challenges and whether Washington is serious about fixing them.
Within the next few weeks, we will know how much further indebted we have become in FY 2011.
In August, the Treasury Department estimated that the deficit for the first ten months of the year had exceeded $1 trillion – the third straight year of trillion dollar deficits. Estimates are that this fiscal year’s deficit will be between $1.2 and $1.4 trillion.
That in turn will place pressure on Congress to reign in our deficits and debt.
Congress will come back on Monday to extend government spending authority until November 18th, having narrowly avoided an accidental and manufactured crisis only last week.
If all appropriations bills have not been passed and signed by the President by then, there will be another round of political warfare over a new Continuing Resolution as Republicans seek to cut more spending over Democratic objections. The threat of another government shutdown is not impossible.
But that drama will quickly be overshadowed by the deliberations of the Super Committee, which is to vote on its recommendations to reduce spending by $1.5 trillion over the next decade by November 23rd. The recommendations, regardless of their seriousness, will generate controversy across the political spectrum.
If the Super Committee approves its recommendations, then the plan goes to the House and Senate for an “up or down” vote by December 23rd. Failure to agree to the plan would mean sharp and painful cuts across the board that would take effect in 2013.
Expect exhaustive political drama between now and then, that will have a significant undertow on financial markets as political rhetoric hits a fevered pitch.
Also, at some point in the next 90 days, Congress will consider President Obama’s jobs plan. While the plan as envisioned is DOA, expect that some of the tax cutting provisions will get picked up in larger appropriations bills as we near year’s end.
We will also know if the Bush tax cuts are extended.
Within the next 90 days, the Supreme Court will decide whether it will hear a case that will allow the high court to rule on the constitutionality of Obamacare in its next term, starting in January.
The stakes for the President and his re-election effort – the decision will be rendered in June – could not be higher. Whatever the decision, it will likely have a profound impact on motivating partisans on both sides of the aisle, with a telltale effect on the election trail.
Within 90 days the nation will know for sure the final make up of the Republican field for 2012, and will possibly be only days away from the first official party vote. Barring a 19th century style hung convention that turns to a candidate of the Party bosses- from that field will come the nominee to challenge President Obama.
Within 90 days we’ll know if the US has tipped or is tipping back into recession.
QII GDP was has remained at 1.3 percent through the three quarterly re-estimates, up from .4 percent in QI. Preliminary QIII GDP will be announced October 27th, with the final evaluation published on December 22nd. Dismal unemployment and manufacturing numbers from the summer do not bode well for a more robust recovery.
Internationally, within 90 days we will know whether the EU was able to bailout Greece amid disintegrating economic conditions, and whether a plan for a much larger bailout fund that would backstop larger, troubled economies in the EU is politically feasible.
If there is going to be a cascade financial crisis rooted in the sovereign debt challenge, it will most likely occur in the next 90 days as political and economic institutions fight to stay ahead of financial deterioration. For the Europeans, a full blow crisis is clearly unacceptable, but there may not be sufficient political will to make painful choices in the seventeen sovereign countries, to prevent it.
Picture “Guns of August” applied to sovereign debt.
Within 90 days we will know whether China’s determination to slow growth to deal with rising domestic inflation serves as de-facto trigger to global recession.
Politically, in 90 days we will have concrete evidence of what the Arab Spring really means, when Egypt holds parliamentary elections in November. We will also see what Western support has purchased in the government that emerges in Libya. We will also know whether revulsion at mass killings of civilians leads to a de-facto civil war in Syria. The UN will likely take up the case of Palestinian statehood roiling Israeli-Palestinian relations.
So, political upheaval, economic and financial uncertainty at home, and upheaval, economic and financial uncertainty abroad.
The overriding question is whether political leaders marshal their power to address these crises, or simply punt?
Recent history is not reassuring.
That might make for a unsettling holiday season, and we should all plan accordingly.