What would have happened if we had sailed over the cliff?

This is now a moot point, but the stakes were high.

Many observers had said the combination of spending cuts and tax rises would have amounted to a 4-5% cut in the country's output, wiping trillions off the value of an already fragile economy.

The IMF had calculated that the immediate neighbours of the US, such as Canada and Mexico, stood to lose the most from the fiscal cliff.

"But China and several advanced countries would also suffer up to one quarter of the hit taken by US growth," it added. China is the world's second-largest economy.

It also predicted a drop in commodity prices - of 6-12% for energy and 3-6% for non-energy such as food prices - would affect exporters of these goods.

For most markets, the US remains the largest importer, so any drop in demand is felt throughout the world.

I. Vocabulary:

fiscal cliff – фискальный/бюджетный обрыв

deadline – последний, предельный срок

pass legislation – принять закон

impose higher taxes on the wealthiest Americans – ввести более высокие налоги

на самых богатых американцев

postpone the start of big spending cuts – отложить значительное сокращение расходов

reach a deal – заключить соглашение

strike

send the US economy back into recession – вновь ввергнуть экономику США

в рецессию

pass a programme of tax cuts – принять программу сокращения налогов

under the provision – при условии

expire – истекать (о сроке действия)

extend the deadline – продлить срок действия

payroll tax – налог на фонд заработной платы

debt ceiling – максимальный уровень госдолга США

statute – закон, статут

borrowing level – уровень заимствований

tackle the ballooning US deficit – заняться проблемой быстро растущего дефицита США

trigger tax increases – инициировать увеличение налогов

spending cuts сокращение расходов

enjoy a blocking minority – иметь блокирующее меньшинство

wield a veto – обладать правом вето

in excess of – свыше

raise the threshold – увеличить порог

Speaker of the House of Representatives – спикер палаты представителей

scrap an offer – снять предложение

brinkmanship – политика балансирования на грани возможного (или допустимого)

blink – дрогнуть, потерять самообладание

go over the cliff – свалиться с обрыва в пропасть

militant – воинственный

patchwork of short-term measures пестрая картина краткосрочных мер

permanent постоянных

employee contribution to Social Security – отчисления служащих в фонд соцстрахования

gross pay – зарплата до вычетов

unemployment benefit – пособие по безработице

moot point – спорный вопрос

high stakes – высокие ставки

amount to a 4-5% cut in the US output – составить 4-5% сокращения объема производства США

wipe trillions off the value of a fragile economy – нанести потери слабой экономике на сумму в триллионы долларов

stand to lose the most – потерять больше всего, оказаться в самом

большом проигрыше

suffer up to one quarter of the hit taken by US growth – понести убытки в размере до одной четверти потерь США из-за удара, нанесенного росту экономики последней

drop in commodity prices – падение цен на сырьевые товары

affect exporters – отрицательно сказываться на экспортерах

drop in demand – падение спроса

II. Answer the following questions using as many vocabulary

items as possible:

1. What is the fiscal cliff?

2. How was it avoided?

3. What is the deal?

4. What would have happened if the deal had not been reached?

III. Give a short talk on the deal reached by US Congress and the President to prevent going over the fiscal cliff.

RATING AGENCIES

AAA, CCC... they look like some kind of school report.

The ratings are given to large-scale borrowers, whether companies or governments, and are an indication to buyers of this debt how likely they are to be paid back.

They can also affect the amount that companies or governments are charged to borrow money.

If a country is thought to have suffered a downturn and its rating is lowered, investors may demand higher returns to lend to it, as it is judged a riskier bet.

Borrowers in the news with downgraded ratings now include the UK, most eurozone governments, and the US.

But the companies doing the marking are nowhere near as familiar.

They are credit-rating agencies, which exist to assess the creditworthiness of bond issuers - companies or, as in this case, countries who borrow money by issuing IOUs known as bonds.

Poor and Moody

Standard & Poor's (S&P), as the oldest, comes first. It was begun in 1860 by Henry Poor, who wrote a history of the finances of railroads and canals in the United States as a guide for investors.

The "Standard" part came into being in 1906, when the Standard Statistics Bureau was set up to examine finances of non-railroad companies.

The two businesses joined forces in the 1940s.

Moody's was started in 1909 by John Moody, who published an analysis of the world of railway finances, grading the value of its stocks and bonds.

These are now mighty concerns - Moody's operating income was $688m in 2010 and Standard & Poor's made $762m.

They each have 40% apiece of the business of rating major companies and countries.

Fitch was set up by John Fitch in 1913 and is a smaller version of the other two.

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