Sunday, November 18, 2012

US tries to avert fiscal cliff: lessons from the 1996 shutdown

All eyes remain fixed on Washington, DC these days as the fiscal cliff negotiations continue between the Obama White House and House Republicans led by Speaker John Boehner. Unless a deal can be struck before the December 31 deadline, the government will be compelled to enact spending cuts totaling $6 Trillion and raise taxes across the board, in accordance with the rules of sequestration set down in the 2011 deal ceiling agreement.  It is widely believed that if the US does go over the fiscal cliff and the cuts and tax increases are enacted, there will be a substantial slowing of the economy.  Needless to say, financial markets have been closely following the talks and the lack of progress so far has led to recent declines in the stock market. 

In last week's post, I suggested that November did not look promising for any quick solution.  The combined relationship horoscope of Barack Obama and John Boehner did not look promising for an agreement.  Jupiter seemed to have a stronger role in December in this chart and increased the possibility of cooperation and hence a deal. However, it is hard to base predictions on such an approximate chart, since Boehner's birth time is unknown.

This week I wanted to look at the fiscal cliff problem from another angle.  The national chart of the USA should offer some clues about when a deal is more likely to be found.  As a rule of thumb, a deal would be more likely when benefic planets form more aspects than malefic planets.  The Sun is the planet that symbolizes government so a deal would be more likely when the Sun is under the influence of a favorable planet.  Conversely, we would expect Mars to be relatively inactive if a settlement could be found between the two sides.  Mars typically represents situations of conflict and frustration, especially when it is involved in an aspect with another natural malefic. 

We can gain added perspective by looking at similar situations in the past.  In 1995 and 1996, the US was similar plagued by political disagreement over budgetary matters as the government was shutdown for several weeks.  President Bill Clinton and Speaker Newt Gingrich could not come to an agreement over the extent of spending cuts and the result was an unprecedented period of political rancor and dysfunction.  We can clearly see how afflicted the US horoscope was on November 13, 1995 when talks broke down between Democrats and Republicans.  Transiting Rahu (disruption, distortion, selfishness) was aspecting the natal Mars (conflict, frustration, assertiveness).  Since Rahu moves quite slowly, this was one of the main sources of the ongoing conflict in government that lasted into January 1996.  There were actually two periods of shutdown, as an temporary emergency agreement expired in December and that led to another shutdown from December 16 to January 6. As an added burden for that initial shutdown on November 13, transiting Mars cast its full strength 8th house aspect (the quincunx) to the Sun (government) reflecting conflict involving government.   We also note how all three of the transiting planets Venus, Mars and Jupiter are under the close influence of Saturn's full strength 3rd house aspect (i.e. 60 degree or "sextile").  Saturn is often a negative or impeding influence so its triple aspect here of these transiting planets would tend to undermine the ability of each to fulfill their promise.  Saturn therefore blocked Jupiter's wisdom and capacity for balanced and harmonious thought, Mercury's communication and rational intelligence, and Mars' positive potential for quick and decisive action.  The chart as a whole was very afflicted when talks broke off and the shutdown occurred. 

But a resolution was found on January 6.  We can see that most of the afflictions had passed by that time.  Rahu had moved passed its tight trine aspect with Mars by a full two degrees, thus much of the source of the animosity would have lessened by the time an agreement was reached.  With Mars less prominent, there was less aggression in the air and this created more space for compromise.  Transiting Jupiter had moved away from the negative influence of Saturn and in fact had moved to sit atop the ascendant, which represents the body, self or in this case, the country as a whole.  This is usually a very positive transit in any event, and strongly supports the notion that Jupiter brings harmony and enlightened thought to most situations.  The symbolism of Jupiter to the Ascendant is an unmistakable indication for relief and resolution that this agreement would have provided.  The crisis had passed and now the government could return to its normal functioning.

The current fiscal cliff negotiations are perhaps less serious but it is nonetheless analogous.  The current chart is afflicted but arguably less so than in 1995.  Transiting Rahu is still afflicting Mercury which can undermine communications and rational thought.  This transit has been in effect for several weeks already and contributed to some of the voting problems on election day.  The fact that Mercury is still in close aspect with Rahu is not positive for getting a deal done in my view since it will tend to distort communication between the key institutional actors.  If a deal does get done under this transit, it seems less likely to last or accomplish what was intended.

Looking at this chart for later this week, we can see that transiting Mars (10 Sagittarius) is exactly conjunct the ascendant of the 6.30 pm USA chart -- not good.  On its better days, Mars can symbolize taking necessary action (esp. military action) but it is opposite Venus here so that does not look conducive for cooperation or agreement.  Venus is also a co-ruler for wealth and the economy so that is an added problem for such matters.  Uranus is setting up in a square aspect to the ascendant ahead of its station in December.  This is another source of instability in a general sense, especially since it also forms an aspect with Venus.  Transiting Saturn (11 Libra) is closely aspecting the ascendant at the moment which can tend to depress the mood of the country as a whole.  This may be a reflection of the anxiety about the negative economic effects of the fiscal cliff.  This may also be one reason why the markets are not doing well. 

A deal seems fairly unlikely as long as Mars is in Sagittarius and continues to oppose the natal planets in Gemini. Mars will move out of Sagittarius in mid-December so that may remove some of the ongoing conflictive mindset. That is perhaps the first favorable window of opportunity for an end to the fiscal cliff negotiations.  Alternatively, mid-January also looks positive as Venus enters Sagittarius and thus conjoins the Ascendant. More broadly, by January we can see that the Rahu-Mercury transit will be weakening as Rahu moves away.  This will tend to improve the chances for constructive and rational discussion over time.  Given the level of dysfunction and partisanship in DC these days, that is definitely a good thing.  Overall, then, I think the odds are fairly good that a deal will get done, although it is possible we may have to wait until January.  Whether it or not it is achieved before then is harder to say with any certainty.

As noted above, the markets are not doing well under the shadow of the fiscal cliff talks.  US stocks fell again last week as the Dow closed down 1% at 12,588.  Indian stocks were also lower as the Sensex lost 2% finishing at 18,309.  This negative outcome was in keeping with expectations as I suggested last week that the two negative Mercury aspects with Neptune and Mars were likely to correlate with losses. 

The outlook this week may be somewhat better due to a positive Sun-Venus-Neptune aspect in the first half of the week.  This is in keeping perhaps with the traditional bullish bias of the market before the US Thanksgiving holiday.  However, there is a tight Saturn-to-Mars aspect forming here that may reduce confidence. The aspect is closer later in the week so declines are more likely at that time.  Friday's Mars-Uranus square aspect could also bring some nasty surprises for the market.

Transits for Wednesday 21 November 2012  9.30 a.m. New York