Newspaper article Sarasota Herald Tribune

Congress Must Realize Public and Wall Street Expect Solution

Newspaper article Sarasota Herald Tribune

Congress Must Realize Public and Wall Street Expect Solution

Article excerpt

Regardless of which side of the political, economic or picket fence you are on, there is one thing about which we can all agree: A historic election is over, the country has spoken and now it is time for the winning team to see if they can put some points on the economic scoreboard.

Barack Obama won the presidency on a theme of continuing the change he began four years ago. I wish him luck. Personally, I am not sure why anyone of sound mind would want the job. They say a new broom sweeps clean, but it is going to take a lot more than a new broom, or in this case a revitalized broom, to get this economy fully functional and at the same time keep a collar on Wall Street.

But there is one thing you can count on -- while the sheriff in town remains the same, the ground rules for corporate America and Wall Street are going to have to change radically. We face a looming budget crisis and a continuing disconnect over how Washington and Wall Street view each other. Therefore, the end game could result in pain for everyone, but especially the financial markets.

It is certainly no secret that at the beginning of 2013, a $600 billion combination of tax increases and spending cuts -- affectionately known as the fiscal cliff - will automatically become law unless Congress acts soon and decisively. Indecision and inaction, while unlikely to sit well with the general populace, would give Wall Street a hard punch to the solar plexus.

What is most discouraging is that neither Wall Street nor Congress appears to be taking each other seriously. Many in Washington believe that Congress could do nothing and Wall Street's reaction would still be relatively sanguine.

Not so -- Wall Street has coalesced around the view that, with the election over, Congress will reach at least a short-term deal to avert the cliff. A failure by Congress to reach a solution invites a Wall Street implosion.

Wall Street and Washington have misread each other in the past, with near calamitous results. One of the ugliest moments occurred in September 2008, not two weeks after Lehman Brothers collapsed. Back then the House rejected a $700 billion financial bailout plan. …

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