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Alexander's take? The pick is likely to strengthen support for fiscal consolidation, and pull forward the debate about the Fiscal Cliff, thus creating a negative for markets.
Romney’s choice of Ryan for VP suggests that fiscal policy is likely to play a more prominent role in the campaign than previously expected. This will tend to highlight core differences between Republicans and Democrats on tax and spending priorities and may heighten concerns about how smoothly the problem of the “fiscal cliff” will be handled after the election.
In addition, this choice, and its impact on the content of the campaign, is likely to reinforce political support for fiscal consolidation. This suggests that the policy debates that will come after the election may generate a more front-loaded fiscal consolidation than previously expected.
Both of these factors may be a headwind for risky assets in coming months. In effect, with this choice concerns about the “fiscal cliff” may affect markets somewhat sooner than we had earlier thought.
Edited By Cen Fox Post Team
