Where are bond vigilantes? The guys who will sell bad bond credit. Where are the equity vigilantes? The guys who will sell poor economic growth and bad cash flows. The tax vigilantes who will take capital gains now to avoid taxes tomorrow. The markets do not seem to be reacting to the fiscal cliff.
Yes, there are declines when there is new announcement in press conferences, but the trend is at worst sideways. There is no cliff as measured by the behavior of markets. There only is two weeks before liquidity starts to evaporate. Then it is almost too late.
Is there the assumption that the life will be avoided before Christmas? That does not seem likely. Even if there is an agreement on taxes for the 2%, there is still the problem that capital gains taxes are going up. Dividend taxes are going up. The ObamaCare taxes are going into effect. Payroll taxes are going higher.
The sentiment seems like we are bored by the process, yet the end is coming it is just beyond the Mayan calendar issue. We need market vigilantes to send a message.Where are these people? The foreign bond holders should speak.
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