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News Summary: Stocks a wild card on fiscal cliff

The Associated Press

FILE - This Nov. 16, 2012 file photo shows President Barack Obama shaking hands with House Speaker John Boehner of Ohio in the Roosevelt Room of the White House in Washington, during a meeting to discuss the deficit and economy. Congress and the White House can significantly soften the initial impact of the “fiscal cliff” even if they fail to reach a compromise by Dec. 31. One thing they cannot control, however, is the financial markets' reaction, which possibly could be a panicky sell-off that triggers economic reversals worldwide. The stock market's unpredictability is perhaps the biggest wild card in the political showdown over the fiscal cliff. (AP Photo/Carolyn Kaster, File)

WORRIED TRADERS: If Congress and the White House fail to head off a fall over the "fiscal cliff," the biggest wild card may be the financial markets' reaction. Some say it could be a panicky sell-off that triggers economic reversals worldwide.

ONE VIEW: Wall Street could be so disgusted or dismayed that stocks would plummet before lawmakers could prove their willingness to mitigate the fiscal cliff's harshest measures, including deep, across-the-board spending cuts that Defense Secretary Leon Panetta says could significantly damage the nation's military posture.

ANOTHER VIEW: But so far, the stock markets have stayed calm. The S&P 500 index is up 12 percent for the year. That might be because investors agree that a temporary trip over the cliff wouldn't be too harmful. Chastened lawmakers, the thinking goes, would quickly minimize the economic damage with a deficit-reduction compromise that eluded them in December.