The US fiscal and debt problems have been overshadowed by Europe. However, we expect the focus to shift onto US government finances and political discord as the election nears.
The ‘fiscal cliff’ is looming; the debt ceiling will need to be raised; and budgetary decisions for the next fiscal year have to be made. The US is left with the choice between two evils: fiscal austerity that puts GDP growth at risk, or more debt that adds to an already huge pile. One road could lead to recession, the other to another possible US rating downgrade. We also give a recap of where we are in the electoral process and outline the specifics of the elections, including a timeline, current polls, seat counts and expectations for the congressional races.
In no way are we making any judgement on the Eurozone situation. Rather in the world of relative value, we believe the focus on US politics, debt dynamics and fiscal choices should see the USD fall, even against its beleaguered ugly sister the EUR.
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Global Research