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Fiscal cliff scary, debt ceiling scarier

Posted By -NO AUTHOR- On 12/29/2012 @ 12:28 am In Money | No Comments

(Economic Times) Investors fearing a stock market plunge – if the United States tumbles off the “fiscal cliff” next week – may want to relax.

But they should be scared if a few weeks later, Washington fails to reach a deal to increase the nation’s debt ceiling because that raises the threat of a default, another credit downgrade and a panic in the financial markets.

Market strategists say that while falling off the cliff for any lengthy period – which would lead to automatic tax hikes and stiff cuts in government spending – would badly hurt both consumer and business confidence, it would take some time for the U.S. economy to slide into recession. In the meantime, there would be plenty of chances for lawmakers to make amends by reversing some of the effects.


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