Most observers on Wall Street 'are confident' on possibility of debt agreement

QUIET CONFIDENCE: Despite doubts that a deal might not be reached, the New York Times' David Barash writes that most observers on Wall Street are confident that the two sides will reach a crisis-averting agreement.

One of the classic games studied in game theory is chicken: two players rush toward each other, each wanting the other to swerve. The one who does, loses. The trick to winning is for one player to convince the other that under no circumstance will he or she veer off course. For instance, you could insist you’re not really concerned about a crash, or that you might even welcome a collision. Convinced the other driver really feels that way, any rational actor would have to swerve.

President Richard M. Nixon attempted to use this tactic during the Vietnam War. Through various back channels and planted news leaks, he gave the impression that he was not only out of patience but also literally out of his mind, such that, even though it would be totally irrational, he just might use a nuclear weapon on Hanoi if Ho Chi Minh, the North Vietnamese leader, didn’t accede to his demands. (It didn’t work.)

All historical points aside, I reserve my doubts. Still, they'll probably work something out; they're certainly hoping so.