So Sunday night came and went without a market meltdown. And now the market talk is of “we all know they will make some kind of deal” so … what’s the big deal?
Let me ask you, what if they don’t? What if Congresspeople who truly don’t understand how financial markets function on perception decide that their own re-election trumps any reasonable compromise? What if President Obama comes to the same conclusion? Neither is that outrageous an outcome at this stage. And today’s run-of-the-mill sell-off only increases the likelihood that no deal – or a stupendously bad deal – will be made.
Ask the question in terms of the social-emotional context for the decision makers. What drives them – not from a logical or even ideological point of view but from the one that counts – the context of how they feel? Decision research proves you have to have a feeling to make a decision so in the end, what they do will be based on how they feel.
Sure they can talk about lofty goals but at the end of the day – particularly for the President – what happens now is about getting re-elected. And what happens on the side of his opponents is making sure he doesn’t – and they do. Both will be constantly calculating their predictions for this – as opposed to their true desire and obligation to vote in the best interests of the country. Obama has repeatedly shown that he has no core so he may blink but he now has the Senate substituting for him. (BTW – shouldn’t it have been the other way around – he stepped in, not out?)
Financial markets may be relatively sanguine now but that in an of itself should be a warning sign – they aren’t acting as expected. Whenever that happens – something else is afoot. Mapping the emotional trajectories of the decision makers provides a wide open window into the future.