Fiscal fears: Wall Street vs. Main Street

>>> today. i have settled on slope. but we're still spinning the wheel.

>> somehow i see a foregone conclusion with that. i'm krystal ball.

>> a toure. why it's so expensive to stay healthy unless you're royalty.

>> i'm lady cupp. you can be royalty, too. it's what you get for the friend who has everything. ?>> all that and ken burns takes a seat at the table on wednesday, december 5th .

>>> 27 days to go in the debt fight and republicans say the next 72 hours are critical. so we'll have the last several weeks just for show? it's time to spin the wheel of misfortune and today we are going with fiscal slope. gradual fiscal slope, actually. a term i tried to coin a few weeks ago. anyway, i guess not much changed since then. both sides are locked in a stalemate.

>> in any way suggest that they're going to tie negotiations to debt ceiling votes and take us to the brink of default once again as part of a budget negotiation which by the way we have never done in our history until we did it last year. i will not play that game.

>> despite the doomsday talk in washington on wall street there's a sense of optimism. just an hour before markets close and the markets don't seem very fazed by the fiscal slope. usually the opposite of what happens so to kick things off today, we start with neil irwin, colonim columnist at "the washington post ." when the election ended and looking ahead ? there's a conventional wisdom apparent in the coverage that, wow, to have this drama for a few months of the year, unsettle, roil the markets and not doing that and seems like the markets sort of telling us, you know, even if you go over the so-called cliff and down the gradual slope for a few days or weeks in january, that's not going to both earl us either.

>> whyeah. there's a huge disconnect. there's almost a what me worry approach in the financial markets . these measures of volatility that predict the ups and downs to see are low. wall street isn't nervous right now and the interesting thing is it going to take panic on the markets to drive a deal? if you're a republican to vote for tax increases, entitlement cuts, does it take scary stuff on the markets to force you to action?

>> so i guess your colleague at "the washington post " today, matt miller , wrote a column and looking at the possibility or the prospect of sort of a per perpetual fiscal cliff and using the debt ceiling to force concessions. they, you know, used cliche they kicked the can down the road to the super committee and that blew up and now this and talk of a two-prong solution and then dealing with entitlements next year. it does seem like we just keep making, you know, small incremental decisions and then putting off something ? bigger for six months, a year, 18 months. when will the insanity stop on this?

>> yeah. i mean, the thing is --

>> 300 calories!

>> stop the insanity!

>> that was -- that was susan powter . i knew we talked about it before the show and didn't know we would play it. when will we listen and stop the insanity? feel free to answer.

>> yeah. look. you know, it's a real dynamic in place where it takes the horrible things to happen, a risk of a recession, of a debt ceiling, you know, defaulting on u.s. debt , it takes the really dramatic things to force action but it gets back to the issue of where are the power levers and the forcing mechanisms to make the government deal with the deficit? that's not coming from the markets . the bond market is saying here's the money you want and we're kind of creating these things out of nowhere to force us to deal with the long-term deficit problem but the short term markets aren't doing it.

>> neil , talk about these markets you speak of. i want to play a clip of maria the other day.

>> the markets right now are expecting a deal. the markets have been trading fine. if we don't gate deal, we are going to see a sizable decline in stocks. we are going to get a big disappointment.

>> markets will be disappointed. the markets have expectations. who is this mr. markets that is endowed with the personality and ? expectations and is this monolithic creature that will respond to, you know, what's going on in washington ? are we giving the markets a little bit too much personality here?

>> well, yeah. i mean, obviously the market is millions of people and institutions all over the world deciding whether to buy stocks or bonds or whatever but more broadly, you know, it is true that markets aren't, you know, they're not always rational. we have seen this a number of times when, you know, for a long time, for example, before the crisis of 2008 , markets saying it will work out. it will be fine. it took this failure of lehman brothers and a collapse to really deal with what we were dealing with in 2008 . look. markets aren't perfect predictors but they're telling us something.

>> neil , you wrote something that i found interesting. a point i didn't hear anyone else made. from the column, what's going on right now is kabuki theater but they're actors in the play, as well. not just the audience. their role is to be a sort of forcing mechanism of their own only when they start to panic will there be pressure on lawmakers to take some hard votes. so interesting take. i sort of agree with that but does that indicate we would be in a better place if the markets were freaking out?

>> i think the negotiation would be further along. we are in the stage of proposal and counterproposal. there may be things behind the scenes we are not aware of in ? public, at least, this is a very early stage and considering it's three weeks away. we don't have time. christmas holiday in there.

>> you are saying the markets still could freak out?

>> absolutely. i mean, getting to the end of december and no real movement toward a deal, you know, if we get to december 27th and close to a deal, takes a few days to get it passed through congress and signed, this's not a big deal . to the 25th, 26th, 27th, no progress, that's -- you know, there's ever reason to think we'll see some real movements that make people nervous about the 401(k) and call the congressman and say what are you doing?

>> will they be able to call if they're not in d.c.? the house canceled thursday leaving only three more days for them to negotiate in 2012 to avert the cliff. what do you make of this move? should we make a lot out of it? cantor and boehner saying we don't have anything to vote on and going to go home and why do we have to sit here and wait to vote? is this more as krystal said kabuki theater , bad optics, a maneuver of political warfare?

>> yeah. this is -- look, this is the gamesmanship we see when there's standoffs. i won't come to you. you come to me. boehn boehner's position is we've given you our plan and now for you, mr. president, to come back with what you're willing to do and probably not in a way we're aware of and sutd l calls between, you know, negotiators for the president and the congressional ? republicans. whether the out ho house is in session only matters with a deal and manager to vote on. look. just because things are bogged down and in the standoff mode right now doesn't mean all is lost. it just means we don't know for sure that any progress is being made.

>> there's another item here that i cannot let the segment end without addressing. critical both for us and the country. let's take a look.

>> stop insta-gramming your breakfast and tweeting the first world problems and getting on youtube to see gangnam style. and start using those precious social media skills to go out and sign people up on this baby, three people a week. let it grow and don't forget, take part or get taken apart. boy, these old coots will clean out the treasury before you get there.

>> that's alan simpson with a bold call for citizens to demand a bipartisan common sense solution and i have to say i want a common sense solution. bold as that may sound, i want a common sense solution.

>> krystal , i don't want to -- you know, i don't want to explode people's minds here but i think i agree with you.

>> no.

>> i also want a solution. but i refuse to stop insta-gramming my breakfast. that i kabt support. that's something i like to do a lot. it's something that's important to me. i won't go there but i want a

>> that doesn't have the classic solution. --

>> when do president obama and john boehner do the gangnam style dance and then we'll be in a better place .

>> you know, i want to say quickly, that reminds me of al simpson doing that, say what you will about him. he has a showman's flare. when he retired from the senate in 1996 , he came up to the kennedy school in cambridge and he was working there with robert reich and got together and pitched a public television show . it's alan simpson 's 6'7", robert reich , 4'10" and called it the long and the short of it.

>> i know you're not making it up.

>> comedy and politics, road trips . i watched it! senior in high school . i even attended a taping.

>> last question. will you boldly go on the record right now and right here to support a common sense solution.

>> everyone has a different deaf situation of common sense . that's too easy.

>> neil irwin, thank you for joining us.

>>> ahead, washington may be stuck in the neutral but the rest of the country is moving forward. new numbers of pot and gay marriage will have you talking. it's in the spin cycle as we roll on for wednesday, december