Tags: Fiscal Cliff | Kristol | volatility | opportunity | cliff

William Kristol to Moneynews: Future Holds Volatility, and Opportunities, Too

By Forrest Jones and David Nelson   |   Tuesday, 04 Dec 2012 09:24 AM

The United States is facing economic uncertainties that could roil markets in the near future, but there are opportunities around the corner to turn the country around and resume course for growth and prosperity, said William Kristol, former chief of staff under Vice President Dan Quayle and founder of “The Weekly Standard,” a conservative news venue.

In the meantime, Republicans will have to work with the Democratically controlled White House and Senate when it comes to steering the country away from the fiscal cliff, a combination of tax hikes and spending cuts due to take effect at the same time at the end of the year, Kristol added.

There’s no denying the economy is battling headwinds in the form of fiscal uncertainties as well as inflationary side effects stemming from Federal Reserve interest rate cuts and liquidity injections into the financial sector designed to stimulate the economy, Kristol told Newsmax TV in an exclusive interview.

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“I’m the last person to predict the economy or stock market, but it does seem there’s an awful lot of things in play at once. There are trillion dollar deficits, the Fed’s zero interest-rate policy, political uncertainty and unpredictability — you get all of these things mixed up and I don’t think the normal rules of the road are likely to apply,” he said.

Surprise could come on the upside, however.

“We’ve had huge energy development. What if we got a decent deal that made the markets somewhat confident that entitlements were being addressed finally? What if we got a tax code that encouraged a little more investment, a little more growth?” Kristol asked.

“There is still a potential, I think, for a pretty great upside in the U.S. economy. But there are also a lot of great cliffs ahead, not just this short-term government fiscal cliff.”

When it comes to the fiscal cliff, Republicans will likely compromise with Democrats, who control both the White House and the Senate.

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop. 

Public-sector and private economist have warned failure to agree on a way to avert the fiscal cliff will send the economy sliding into a recession next year.

“I think they need to acknowledge that President Obama won the election. That’s something I am not happy about. They can’t expect to drive as good a deal as they might have had if there were a President-elect Romney,” Kristol said.

“I do think we probably will want to avoid the fiscal cliff, so I think it’s worth giving away something for a short-term deal.”

Meanwhile, Kristol said of his fellow Republicans, focus on avoiding the fiscal cliff, but look forward to solving longer-term fiscal challenges next year and even toward the 2016 presidential elections.

“It just means we are not going to get the kinds of policies we would like. We can exhort our people to be strong and tough and smart, but in the end of the day, they are just in a bit of the minority for now,” he noted.

“It does mean it’s very important to win some elections in 2014 and really important to win in 2016. I think we have to make the best of a bad situation, honestly, over the next three to four years, prevent too much damage to the economy, prevent too much damage to the country and maybe get a few good things done.”

Editor's Note: Unthinkable Haunts Investors: Evidence for Imminent 90% Stock Market Drop. 

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