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Video: Forget the 'Fiscal Cliff' - Debt Ceiling is Much Scarier

Reuters - Ryan Vlastelica, Edward Krudy and Doris Frankel

Investors fearing a stock market plunge if the U.S. 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 raise the nation's debt ceiling as that threatens a default, another credit downgrade and a financial markets panic.

Market strategists say that falling off the cliff for any lengthy period -- which would lead to automatic tax hikes and stiff cuts in government spending -- would badly dent both consumer and business confidence, but 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.

That has been reflected in a U.S. stock market that has still not shown signs of melting down. Instead, it has drifted lower and gotten more volatile.

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Diamond Dog's picture

Both sides want to go over the cliff

That way everyone is absolved of responsibility. Everyone can sit around and blame each other. This is their form of "leadership."

They're shortsighted, petty and ignorant.

Welcome to the human race.

The Diamond Dog is a real cool cat. | Reporting on the world from an altitude of 420.

Congress is throwing us under the bus.

Congress created this massive debt.

Now they plan to steal our guns so the repo men can't be resisted.

So default is fine with Congress. They will get their reward.

Free includes debt-free!

They say relax

Situation normal. They will fix it in time.

They fail to point out that the debt ceiling, fiscal cliff, and budget are inseparably linked.

Just open the box and see