Did the Fiscal Cliff Really Charge the Market?

A final consideration among investors is that most of these early talks may simply represent political posturing. The president won re-election by a wide margin in the Electoral College and by a convincing majority in the popular vote. Obama's party also gained seats in the Democratic-controlled U.S. Senate and in the House of Representatives. It could be detrimental for House Republicans to refuse to compromise with the president and allow a full fiscal cliff to occur. Obama is finished with campaigning, but House Republicans must consider mid-term elections set to run in two years as they could receive part of the blame from American voters for thrusting the economy back into a recession -- something the Congressional Budget Office has said could happen if legislators allowed all changes to go through.

"Part of it, people have to realize, there's posturing going on," said Fantozzi. "The Republicans are playing chicken with a VW Rabbit; the Democrats, who really have a lot of strength, they're driving a big bus."

-- Written by Joe Deaux in New York.

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