In this game of Over the Cliff, the odds of going over the fiscal cliff now are 50/50, up from about a 33% chance earlier. As a player, assume there are three potential choices;
(1) Over the Cliff (2) Good Compromise (3) Bad Compromise (Boehner Plan B)
Given these three choices, in a game of chance you would have a 33% of picking the right one. But now with the White House rejection of the Boehner Plan B proposal being representative of the Bad Compromise choice, it it would seem there are only two outcomes left; Over the Cliff or Good Compromise. In this particular game you would then have a 50% change of choosing the right one.
Inside the game you have two choices while outside of this game, given these two choices, the path of least resistance for all parties is to do nothing or Over the Cliff.
Bears may feel an Over the Cliff event is a win for them, but the event itself would lead to another set of possible outcomes.
Over the Cliff Rally Over the Cliff Break Over the Cliff Nothing
Even knowing the outcome of the first set, you can be sure market players are positive they know the market direction given the particular outcome, but they really only have a 33% chance of being right here.
