The Economic Significance of Avoiding the “Cliff”

by Elliott Morss, Morss Global Finance Introduction During the entire “Cliff” debate, I focused on one thing only: Will the politicians be foolish enough to imperil the slow and fragile recovery taking place in the US? And on this issue, merely avoiding the Cliff was not enough: the government deficit stimulus had to be large enough to keep the recovery going. Austerity Concerns The Republicans remind me of the German political leaders: oblivious to the dangers of “imposing austerity” too soon, the Germans have demanded that Greece, Portugal and Spain tighten their belts by reducing their government deficits. The result: Greece and Spain have unemployment rates of 26% with Portugal not far behind at 16%. As I have written, these rates are politically unsustainable time bombs.   Read more »