It looks like we’re going over the old fiscal cliff tonight. No deal has been finalized and the current Congress will end its session later today without a vote.
If we’re lucky, the Senate will reach a deal by the end of today, and the new Congress will vote on it when it convenes on Thursday. If the deal looks like it will pass, the markets will react calmly when they re-open on Wednesday. And there will be few if any disruptions in government operations due to the New Year’s holiday and the short gap.
On the other hand, if….Ah, I really don’t even want to think about it.
In the meantime, Happy New Year! And enjoy this parody video. It nicely sums up how I feel about Washington right now.
UPDATE: Well, the Senate and House approved a compromise measure on New Year’s Day that adjusted tax rates on the highest income Americans and postponed action on the issue of automatic cuts in federal programs (sequestration) by two months. So, in about 60 days, I imagine we’ll be going through all this again.
Actually, the scenario I outlined in the original post in terms of Congress voting was wrong. If they had not reached a deal, the new Congress would have had to start all over again because it will have new members. That would have caused delays and negative reactions from the markets.