- what the market impact will be from a failure to avert the fiscal cliff; and
- three stocks you shouldn't even consider buying.
This Isn't Like TARP Posted at 7:46 a.m. EDT on Friday, Dec. 21 We're stuck with bad templates: TARP votes one and two and the Grand Bargain No Bargain moments of 2011. These two Washington-orchestrated calamities caused the stock market to plummet each time, which then helped get a deal done. Anyone who remembers the chaos after the failure of TARP to be passed knows that a 7% drop can occur when Congress chooses not to save the republic's banks. The failure to raise the debt ceiling or come up with anything responsible led to a 19% fall until we got something that worked then, but isn't working now. We were paralyzed by the possible ratings agency downgrades and when we got one we thought, somehow, it was the end of the Earth. It wasn't. Bonds did the opposite of what we thought and staged a remarkable rally. In that sense the selloff was about nothing. I think that these two analogies, which are being trotted out quickly this morning after the failure of Plan B, simply don't work. First, the hated TARP came at a time when there was a run on the banks. You could argue that your ATM might not even have worked if that didn't pass. That one was huge. Second, the debt ceiling deal turned out not to matter, at least when it came to the ratings agencies. It was, alas, almost much ado about nothing. This time around it would not shock me if the president just raised it himself and accepted a court challenge. Bills need to be paid, that's the law. One law -- that the Congress has to approve a debt ceiling raise -- conflicts with another. The payments that the federal government must pay on time.