Will US really fall off the fiscal cliff?

US FISCAL CLIFF

John Stopford, co-head of fixed income and currency at Investec Asset Management, says while the US is close to the cliff edge, it is unlikely to fall over the side.

If the fiscal cliff cannot be avoided it would represent a 4% hit to US growth, which would mean the US goes into a recession next year. Given that the US is one of the few bright spots in the global economy, it would probably mean a global recession. This is definitely a worst case scenario. In the short-run this could actually be positive for the US dollar simply because in that kind of environment people tend to cut risk positions elsewhere and the dollar typically benefits. It would also arguably in the short term improve the fiscal dynamics of the US, but in a rather messy and ra...