So I'm puttering around the office in late December, and I have a sports talk radio station playing in the background on the computer. For a couple of hours I've been listening to the radio host pontificating about the NHL lockout, the Spengler Cup, and the World Junior Hockey Championship. Then he makes a startling confession.

He can't skate.

That surprises me. You see, given that he is someone who makes his living talking about the game of hockey, I had assumed that he actually had played the game at some level. Actually, no. But he sounds good on the radio though.

I think many people would also be surprised by the number of "experts" who make a living pontificating about economic and financial matters, but have no actual background in economics or finance. Their qualifications for the job appear to be limited to the fact that they happen to look and sound good on television.
Folks, not all real economists are quite so telegenic. Trust me on this. I'm an economist.

Anyways, these guys who do happen to look good on TV have a habit about going on ad nauseum about the crisis of the day. They seem to be in a state of permanent pessimism, and as I write this the crisis of the day is this so-called "fiscal cliff".
In fact, talking about the fiscal cliff crisis and the inescapable death spiral that supposedly will follow has become so darn popular nowadays it has almost completely supplanted the discussion of the ubiquitous Euro zone fiscal crisis and the inescapable death spiral that was supposed to accompany that.

Unfortunately there is one inconvenient little problem for these handsome and articulate prophets of doom-and gloom.

The facts.

Folks, you are entitled to your own fears. But you are not entitled to your own facts. And the facts are that the world is not ending. It's not even in that bad a shape.

Remember all that talk about how Greece's debt problems was going to spill over into the rest of Europe; that Greece was patient zero of a forthcoming economic Black Plague that was going to first contaminate and destroy the entire European Union and then, eventually, the whole global economy?

Ya, that didn't happen. Fact is, the European stock markets actually went up by 15% in 2012 as all this pessimism drove share prices to mouth-watering bargain levels for the astute investor.

The same phenomenon is occurring in the U.S.A. as well. With all this talk about the fiscal cliff distracting people from what is actually occurring, some people are surprised to know that the U.S. markets are up by 13 percent in 2012. That's a fact.

Recently I had a client want me to double-check his performance calculations. He couldn't figure out how he could be getting double digit returns in his portfolio when the financial media is rife with all this talk about this crisis and that crisis. His calculations were correct though. He really did get double digit performance in 2012. Folks, I don't care what the guys whose job it is to scare you say, 2012 was not a bad year to be an investor. That's a fact.

But it's easy to be scared of mysterious things. It's easy to be scared about what you don't understand. It's easy to assume that someone who speaks with confidence knows what they are talking about. And so this "fiscal cliff" talk sounds scary.

Now let's separate the fears from the facts.

Fact is, it is the fiscal cliff is not some Mayan-style end of days. On second thought, given the non-event nature of the expiration of the Mayan calendar, maybe the fiscal cliff is exactly like that.

Here's the deal. The United States is spending more than it is bringing in. That's a fact. It's not unique to the U.S., though, and it's also nothing new. 170 years ago Tocqueville said "A democracy will always vote itself more benefits than it is prepared to produce." This is what has happened in the U.S.A.

The term "fiscal cliff" refers to a recession that could occur as a result of some mandated cuts to government spending and tax increases that are slated to happen in January 2013.

But the "fiscal cliff" metaphor is a man-made situation. And so since men created the situation, men can create a solution. It's not like the astrophysicists have projected that an asteroid will strike the earth on January 1, obliteration will absolutely ensue, and there is not a damn thing that we can do about it.

Rather, the fiscal cliff is a self-imposed deadline for the U.S. to reach a political agreement on how to move forward with its tax and spending policies. The Democrats want to raise taxes, the Republicans want to reduce spending. The two sides couldn't agree, so a couple years back they said we need to figure this out by 2013. So far they still haven't reached a consensus.

But the idea of a fiscal cliff is a bad metaphor. Sure, the fact that the U.S. spends more money than it brings in is a problem. But the fiscal cliff is simply a target date for coming up with a solution. Since the U.S. arbitrarily set the date in the first place, obviously the U.S. can come up with some kind of stop-gap interim solution, including extending the deadline. It's not so much a cliff, where all of a sudden the road stops, but rather a road that is pointed in the wrong direction.
Can the U.S. continue to spend more money than it brings in? Of course not. Will things irreparably break on January 1? Of course not.

Meanwhile, lets ignore the rhetoric for a moment and look at the facts. If the U.S. can't reach a political agreement on tax and spending policies there is a mechanism in place that will automatically cut spending and increase taxes. Given the fact that the U.S. continues to spend more than it is bringing in, perhaps a little fiscal cliff tough love is actually completely appropriate.

But is the fiscal cliff a crisis? I don't think so. Disasters don't arrive by appointment. All this talk about the fiscal cliff is the crisis that never was.

The opinions expressed are those of Brad Brain, CFP, R.F.P. CLU, CH.F.C., FCSI. Brad Brain is a Senior Financial Advisor with Manulife Securities Incorporated, in Fort St John, BC. Manulife Securities Incorporated is a Member of the Canadian Investor Protection Fund. Brad Brain can be reached at brad.brain@manulifesecurities.ca or www.bradbrainfinancial.com.