These 4 Mega Banks Weigh in on the Fiscal Cliff
Morgan Stanley (NYSE:MS) has echoed the sentiment that clients would be willing to do business if it weren’t for the fiscal cliff. “We’re having vibrant conversations, and they know what they want to do,” said Morgan Stanley CFO Ruth Porat in an interview with The Huffington Post. ”But they need a little more clarity.”
Citigroup (NYSE:C) research analysts predict a worst case scenario where equity prices drop 20 percent, a $20 drop in oil prices, 5 percent depreciation of the dollar, and a nearly 2 point bump in unemployment if there is no solution.
Washington invited business leaders to the U.S. Chamber of Commerce to get their input. A “grand compromise” solution has nebulously floated through discussions, a proposal where both sides of the isle back away from what they want in the name of what is needed. With the clock ticking, such a solution is clearly ideal, but there’s nothing that can grid lock legislation like partisan bickering.
“We’re three weeks away from serious negotiations on the fiscal cliff,” said Potomac Research Group chief political strategist Greg Valliere to CNBC. “This is a photo-op week, next week is Thanksgiving, then lawmakers will straggle back to Washington to examine what staffers have come up with. The dominant theme in these three weeks will be trial balloons.”
The uncertainty alone has been stifling growth. While the U.S. equity markets have grown in value this year to date, all three major indices have lost value over the last two months. The negative effects on the economy as a result of indecision in Washington is becoming increasingly unacceptable to a business and investing community that is working hard to avoid economic downturn.
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