John Boehner bet his speakership on Plan B, an effort to put pressure on the president by passing an altertnative plan to get over the fiscal cliff without massive tax hikes on all taxpayers, not just the “rich”.
That effort failed, and Boehner will now very likely lose his leadership post when the new Congress is sworn in after the New Year. He will likely be replaced by Eric Cantor, who is ideologically much more conservative than Boehner. Boehner was an old school pol, a backroom deal-cutter. Cantor is much more hardline and negotiating a “midway” deal between what Obama and Boehner were asking for is now much less likely to happen.
Markets have been complacent about the US driving off the fiscal cliff. That complacency is now shattered. Prepare for some year-end volatility with a risk-off flavor.
