Fiscal Cliff Plan B Vote Cancellation Causes Futures Mini-Crash

The S&P futures collapsed when news hit at about 8 PM EST last evening that the Plan B vote in the House of Representatives is cancelled.  Speaker Boehner could not gather the support to pass Plan B causing the vote cancellation to avoid humiliation.  The portion of the republican party opposed to any tax hikes would not vote for Plan B. Perhaps they are the intelligent ones; the government does not have a revenue problem, it has a drunken spending problem.  Besides, raising taxes will only serve to decrease the money coming into government since the economy will go underground and citizens will partake in a cash society, exactly how Greece played out.

The worry is that if the republicans cannot agree to any tax hike, then how can President Obama's bill pass where he desires taxing earners making over 250K, a lower threshold than the one million that failed last evening.  The House left for Christmas vacation, the smell of jet fuel was too overpowering so they dropped the people's business like a hot potato and ran home to sip eggnog in their slippers. Ditto the Senate.  The futures dropped from 1442 to 1391, 51 points, -3.5%, in a couple minutes time, that would qualify as a mini flash crash. Note how price immediately rebounded to a 50% Fibonacci retracement level at 1420-ish. The S&P's are down 21 as this message is typed four hours before the U.S. opening bell.  Global markets are lower, and drifting lower. Hang on to your hat.

Chart is courtesy of www.ino.com and annotated by Keystone.