Maine, Wyoming, and North Dakota showed the greatest increases for the week. (Read Debt Deal Cuts To Be Offset By Lagging Growth And Fiscal Risk Premium).
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On the other hand, a central bank that neglected its duties to play fiscal watchdog could risk its independence.
But greater fiscal and financial risk sharing and breaking the negative feedback loop between sovereigns and their banking systems must be addressed.
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Messily, perhaps, European leaders are at least debating some of the right questions: what degree of fiscal federalism and risk-sharing does the euro zone need to overcome the crisis?
Neither workers nor taxpayers would be exposed to the risk of fiscal irresponsibility on the part of politicians.
Any surprise fiscal moves could increase the risk of a ratings action.
With the stock falling off a cliff on Wednesday, and the risk of the fiscal cliff unsettling markets, Pandora appears as a risky bet.
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Rising debt may reduce the value of the dollar, drive inflation, significantly reduce GDP growth, reduce innovation, and increase the risk of sudden fiscal crisis (collapse).
Public companies and their lawyers are ruminating about whether to disclose to investors the risk of the fiscal cliff to their businesses and the likely effect on stock prices.
Waiting patiently for the sign of this fiscal irresponsibility is a must before risk is added.
That said, if governments tighten fiscal policy too early, they risk sending economies back into recession.
Looser fiscal policies, or even the risk of them, would add to the pressure on some countries' bonds.
Europe, too, is not just suffering from an excess of counter-inflationary zeal (at a time when deflation is also a risk) and inappropriate fiscal restraint: fundamental reforms are needed to labour and capital markets in several countries if domestic demand is to grow significantly.
Officials from the council (CEA) and the White House have kept mum about the report's findings, but we do know it will address the following issues: productivity growth, pro-growth tax policy, the fiscal challenges facing Medicare, catastrophe risk insurance, energy and infrastructure in the transportation sector, currency markets, international trade and investment and immigration.
Optimists say the very risk of recession caused by fiscal gridlock may be sufficient to convince Democrats and Republicans to reach a sensible deal.
Most markets are now hostage to the fiscal cliff debate as it is now risk on or risk off at any moment and no one really knows how the situation will turn out.
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When forecasters struggle to know if we're heading for a triple dip of recession, and the risk of falling off a fiscal cliff next month, a much more distant horizon has been scanned this week.
Another way to assess risk is to look at whether fiscal adjustments can credibly get the country where it needs to be.
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In December 2011, he opted for diplomatic isolation by vetoing the euro zone's plan to embed its fiscal pact in the EU treaties rather than risk confrontation with his party's Europhobes in parliament.
The main source of uncertainty containing risk appetite late in 2012 was the fiscal cliff, which most notably affected global equities.
The recent history of emerging market investing has been fraught with currency crises, massive fiscal and trade deficits, debt defaults, political risk and hyperinflation.
Some banks have systematically lowered their repo debt at the ends of fiscal quarters, making it appear they were less risk-burdened than they actually were most of the time.
And in the U.S., the extended and unresolved fiscal crisis and now the debt ceiling will impact global risk appetite for corporate and portfolio investors.
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Yet, gold also has had days lately when it rose on optimism about a fiscal-cliff resolution, riding the coattails of other risk assets in general, particularly the euro.
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Second, bonds offer return of capital when held until maturity. (Corporate bonds are not completely without risk, so be sure to monitor the fiscal health of the issuer.) Finally, bonds have historically had low correlations with stocks. (When stock prices zig, bond prices often zag.) Thus, even in the current low-yield environment, bonds should not be ignored.
For residents, the risk of a budget that might not cover the fiscal year's expenses is clear.
Gold is the stronger of the two since it serves as a haven for those who are also wary of the risk of owning dollars, given government monetary and fiscal policies.
"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate, " Bernanke said.
From the other side, supporters of the shift to austerity believe it is both essential and appropriate: deficit spending cannot go on for ever, and by boosting firms' and households' confidence and lowering the risk premium on government debt, well-designed fiscal consolidation can actually boost growth.
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