Christine Lagarde On The U.S. 'Fiscal Cliff'

By: Ian Campbell | Thu, Sep 27, 2012
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I suggest you read an article published last Friday by The Telegraph which reports on remarks made and concerns expressed by International Monetary Fund Managing Director Christine Lagarde with respect to the rapidly approaching January 1 (now only three months away) U.S. Federal spending cuts and taxes increases that are then due automatically to come into force.

Ms. Lagarde is said to have reiterated fears that this could send the U.S. into 'deep recession', and that this so-called 'fiscal cliff' could have 'disastrous repercussions' for the global economy.

People seem to be mixed with respect to Ms. Lagarde's views and motivations. I'm not. Not having met her, she strikes me as an intelligent, independent and balanced thinker whose views ought always to be carefully considered.

The outcome of the November 6 U.S. Presidential elections strike me as becoming ever more critical, as the U.S. Federal Government faces critically important decisions with respect to how to best deal with:

The July/August 2011 U.S. debt ceiling negotiations were, to understate things, highly polarized. Such polarization is seriously detrimental to the well being of the American economy, directly and indirectly the well being of us all, and eventually at some level the well being of the U.S. and world financial markets.

I believe a U.S. Federal Government result, irrespective of which party's leader sits in the White House come the January inauguration, that produces a continuing 'seriously polarized' U.S. Federal Government structure is going to result in nothing but further procrastination, bad and badly compromised legislation, and likely seriously bad U.S. and world economic consequences.

As things currently stand, I am not optimistic about Washington being an unpolarized political venue after November 6.

Topical Reference: IMF chief Christine Lagarde says US needs to rein in its banks, from The Telegraph, Andrew Trotman, September 21, 2012 - reading time 3 minutes.



Ian Campbell

Author: Ian Campbell

Ian R. Campbell, FCA, FCBV
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Through the Economic Straight Talk Newsletter Ian R. Campbell shares his perspective on the world economy, the financial markets, and natural resources. A recognized business valuation authority, he founded Toronto based Campbell Valuation Partners (1976), Stock Research Portal (2007) a source of resource companies market data and analytic tools, and Economic Straight Talk (2012). The CICBV* annually funds business valuation research in his name**. Contact him at
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