Back in the dog days of early August, the week of Thanksgiving seemed, in many respects, a long way away. The so-called "Super Committee," formed by the legislation that lifted the debt ceiling and narrowly averted a default on U.S. debt, was given until Wednesday, November 23 to come up with $1.2 trillion in budget cuts or trigger automatic and draconian budget cuts. Perhaps to no one's great surprise, it was reported on Sunday that talks had broken down, and it appears almost certain that the Super Committee will not have a proposal to present today (while the deadline is Wednesday to enact the legislation, Congress is entitled to 48 hours to consider the proposal such that the deadline for the Committee's report is effectively today). As Americans headed to the grocery stores in droves on Sunday to prepare for Thanksgiving feasts, the members of the Super Committee headed to the Sunday talk shows to start the equally American ritual of assigning blame for failure to reach consensus on the difficult budget issues facing the country.

One question now for those of us in the financial services industry is what the failure will mean for the financial markets. Will stocks take a tumble on the news? Does the failure create the risk for further downgrades of U.S. debt, such as by Moody's or Fitch joining in S&P's earlier pessimism? Some economist have predicted that the reaction will be muted as many of the budget cut triggers do not take effect until 2013. Others have noted whatever negative consequence there may be in the markets will pale in comparison to the disorder and uncertainty in the Euro-zone countries. Yet others have predicted that Congress will find a way to make sure that these mandatory triggers are perhaps not so mandatory after all and thus defer the problems until another day.

The Wall Street Journal's "Market Beat" blog concluded on Friday that, in any event, the failure "further cement[s] the sinking suspicion that our country would be better off if all of Congress were set adrift on an ice floe in the Arctic and all legislative power was put in the hands of a ham sandwich with a scepter." Market Beat Blog. While the exact impact remains to be seen, the failure to make a deal, while not unexpected, is nevertheless unfortunate as it adds additional uncertainty to markets already suffering from a great deal of it.

Given the Thanksgiving holiday, there will be no Financial Services Update next week. We would like to take this opportunity to wish our readers a happy and safe Thanksgiving holiday. We are thankful for the opportunity to share our thoughts with you on a weekly basis.