Wednesday, 26 September 2012

Sequestration

In the last couple of days....there's been more interest building on this whole sequestration business.  Some economic experts have come out....and some political figures are hinting at various things.

The number today of concern....that 108k DOD civilians.....not contractors, but regular civilian workers....would end having to go.  It's even pointed out that you can delay this into March/April of 2013, but it just means some serious numbers have to occur quickly by May.

There's also this hint that some Republicans actually want Sequestration to occur....mostly because they see President Obama winning, and don't desire any tax increases onto the public.  The general thought by the rest is that you could cut around the edges....mandate furloughs on government employees....increase taxes to some degree....force mandatory retirement for folks with enough points, and just slide by with minimal forced layoffs for the rest.

My humble opinion is that we will see ten days of discussion after the election.  If Romney wins....the Republicans will come to the baseline and agree some basic tax increases, and then get a four-percent work-force reduction for 2013 (much better than the thirteen percent that sequestration is discussing).  You drag out some retirement papers for the older guys and offer up $25k for some guys to resign, and you somehow avoid a mess.

If President Obama wins....I think the ten days of discussion will be worthless, and then Senator McCain gets a four-month extension into the mess....taking us to the end of April 2013.  We then find almost no compromise with the Republicans and a magnificent ten thousand ton anchor is going to be released in May.  Tens of thousands of notices will go out, and by the end of May....the cuts start.  The economy will falter by ten percent, and 401k funds across America start to fall miserably beyond what people expected.

My suggestion for people if you have investments or 401k deals....and President Obama wins....I'd start to discuss the idea of bonds or just buying into some CD deal for two years.  I wouldn't expect much from the US economy until 2016.  The blame?  It'll try to stick to the President, but it's mostly the fault of those in Congress and the Senate.

Property prices around DC?  Well.... mortgage failures will show by the end of 2013, and I'd expect some great fire-sales on property by early 2014.  Guys in the DC area who get unemployed?  You'd best pack a bag, give up on any real salary deals for six months, and just head out to Wyoming or North Dakota.

I'm trying to be optimistic on sequestration.....but it's funny how you get this little hint or two that some Republicans just aren't going to sign up for nothing much.

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