STOCK MARKET WATCH -- Friday, 7 December 2012

[Demeter]

3. 10 who led us to the fiscal cliff

With our political leaders locked in a fiscal struggle that threatens to throw the economy off a so-called cliff and into recession, you might be wondering how we got to this place. Remember that this supposed fiscal cliff is the direct result of two contradictory impulses in American life: greed and guilt. Greed for low taxes, a strong military, a strong safety net and lots of government spending for everyone. And guilt that we weren't paying our way. All of us (or almost all) had a role in this melodrama, benefiting either from the spending or the lower tax rates -- or both. Despite our culpability, it took strong national leaders to foster the heady mix of greed and guilt that brought us to this spot.

Click through this slide show, published Dec. 5, to see the 10 people most responsible for bringing us to the edge of the fiscal cliff...

http://money.msn.com/investing/10-who-led-us-to-the-fiscal-cliff

1. Arthur Laffer

2. Pete Peterson

3. Bill Clinton

4. Alan Greenspan

5. George W. Bush

6. Dick Cheney

7. David Lereah

David Lereah was the chief economist for the National Association of Realtors and was perhaps the most enthusiastic and public cheerleader for the housing bubble. Even after the bubble began to deflate, Lereah insisted that real-estate investments would never lose money.

Of course, Lereah didn't cause the bubble by himself, but he does embody the greed that engulfed the real-estate industry, the Wall Street banks that profited from it, and the homeowners who took on more debt than they could ever hope to repay.

The housing and credit bubble led to the collapse of the financial system in 2008 and was the direct cause of the Great Recession and the ensuing $1 trillion-a-year deficits.

8. Grover Norquist

As the head of the powerful lobbying and campaign-finance organization Americans for Tax Reform, Grover Norquist has forced almost every Republican officeholder to sign a pledge never to raise taxes under any circumstance. If anyone declined to sign or dared to violate the pledge, Norquist would back a primary challenger. The threat worked.

The Norquist pledge blocked any possibility of a budget deal between Democrats and Republicans over the past two years. Democrats insisted that any plan to balance the budget must include more revenue as well as spending cuts, but Republicans held solid against any tax increase.

There are signs that Norquist could be losing his hold on the GOP, though. Several Republicans won elections this year without signing his pledge, and several incumbents have said they no longer feel bound by the pledge.

10. Barack Obama

President Barack Obama may be the perfect representative of our age, because he encapsulates our national schizophrenia over the budget. He honors both the greed and the guilt. He presided over the largest deficits in history, including a large fiscal stimulus, bailouts of the auto industry and an expansion of the safety net.

But Obama also lectures us about the need for the government to tighten its belt, even during a recession. He wants to raise taxes, if only on a few, and he's expressed a willingness to cut into the great middle-class entitlements. It was Obama's administration that first suggested the bargain in 2011 that created the fiscal cliff.