If You Think Someone In Washington Is Definitely Going To 'Blink', Then Read This

So we know that the markets
don’t (yet) care about the debt ceilingor any other fiscal nonsense happening in DC.

And admittedly, investors have good reason to be inured from the nonsense, and to assume that in the end it will get worked out, probably at the very last second.

In the end, someone will “blink” right?

Well of course, the whole notion of one side blinking comes from the idea of a staring contest. Both sides look keep their eyes open until it hurts, and before anything bad happens, one side agrees it can’t take it anymore.

But the problem with applying the blink metaphor to DC is that you don’t have two sides.

You have the White House, the Senate, The House GOP Leadership, the House GOP grassroots, and the emergent liberal wing of the Democratic party which doesn’t want Obama to negotiate, even if he were so inclined.

And each one of these players has a role. The most volatile dynamic exists not between The White House and GOP Leadership, but between House GOP Leadership, and the conservative GOPers in the House.

If you want to become less sanguine about things, read Jake Sherman and John Bresnahan at POLITICO, who explain that House GOP leadership is banking on some nebulous “Plan C” after their first two ideas to avert a standoff have gone nowhere. It’s pretty hard to suss out what Plan C is, but it’s obvious that House GOP leaders have no real power over their base, nor even the ability to pander to them well.

This isn’t to say it will all end in disaster, but anyone who thinks that one of the “two”sides will give in at the end doesn’t appreciate the dynamics of it all.

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