Why did stock markets have a cow after Obama won? And what does this mean to your money?

Glad you asked. It’s fairly simple, but first you have to know what the ‘fiscal cliff’ is. American politicians passed laws some months ago mandating federal spending cuts unless new laws are passed changing them (nothing is simple). Meanwhile a whack of tax cuts brought in by George Bush are scheduled to expire at the same time (New Year’s). Plus the US is bumping up against its debt ceiling, which means Washington must raise it or run out of cash.

All of this happens about the same time (in 60 days, more or less). That’s the cliff. It would bring substantially higher taxes and deep spending cuts – a $607-billion hit to the economy. Economists, and even that little beaver, F, believe this will cause a recession in 2013. Recessions bring job loss and crappy profit numbers. So, the markets sold off.

Why after election day? Didn’t we all know this was coming?…

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