Monday 31, December 2012 by Matein Khalid

Making money on Wall Street

The fiscal cliff is now the ultimate cliffhanger and the best possible scenario for Wall Street is a called back deal that prevents across the board middle class tax hikes. Tim Geithner had predicted in a CNBC interview that the White House is prepared to go over the fiscal cliff, a fiscal version of JFK’s “eyeball to eyeball” brinkmanship in the Cuban missile crisis. The Republican right in Congress have vetoed Boehner’s efforts to cut a bipartisan deal. This is the mathematics of Von Neumann’s Game Theory (Prisoners dilemma) where malign payoffs dictate the worst possible scenario. Add in Italian politics, fissures in the Spanish growth model (Catalonia, missed fiscal targets, Rajoy’s reluctance to accept the conditionality diktat implicit in OMT), Middle East politics and the ominous rise in the Volatility Index (VIX) above 20.