In movies, the phrase “it’s quiet, a little too quiet,” is a dead giveaway something bad is about to happen. In Washington, it would be a great sign for investors.
With all the jawboning on Capitol Hill these days, investors can be forgiven for thinking that a deal on the fiscal cliff will be preceded by signals from lawmakers that a compromise is near. After all, there has been so much clucking about disagreements between the Democrats and Republicans that it stands to reason they would want to do some crowing when they find common ground.
The reality though, is that the public bombast is a distraction from the real negotiating behind the scenes, and any agreement will be marked by a lack of public comment, not a flurry of sound bites.
“If you hear silence, that means somebody behind the scenes is talking,” according to Steve Bell, senior director of economic policy at the Bipartisan Policy Center and a former Washington insider. “What you should hope for is no more letters, no more explanations.”