The US Elephant

White Elephant: A Possession Unwanted By The Owner But Difficult To Dispose

With less than a month to go to the US Presidential Election, you can expect our media to really ramp up the coverage of all things Obama and Romney over the next few weeks.

The big issue though is the US Government debt that is the elephant in the room of the US economy and will form the backdrop to the election campaigns. Both parties need a strategy to tackle this……according to the Congressional Budget Office, $655 billion of spending cuts are required. That’s 4.7% of US national income. Or to put that another way……the largest economy in the world will be spending less on our goods and services. The US sneezes……the rest of the world catches a cold.

Tightening of that magnitude could cause the US to fall into recession and this will have a ripple effect.  

So forget the Eurozone problems, Greek demonstrations, 1 in 10 Spanish loans being in arrears, a clueless Government in the UK and X Factor……the real stories to shape the next few weeks are in the US.

Hold tight……it’s a huge few weeks for us.

Good luck everybody.