IMF chief Lagarde warns US of Great Recession if it falls off fiscal cliff

     The head of International Monetary Fund (IMF), Christine Legarde, has warned that threats to the US economy are coming from beyond Washington, from across the Atlantic. Legarde, during an interview at her headquarters in Washington, admitted that if the US crosses the fiscal cliff, and goes over the edge, the nation might slip back into recession. "If it was not addressed very shortly, yes," Legarde told CBS News.

"You just look at the numbers. That would entail a growth contraction of about 2 percent in a given year. So if you assume that the U.S. economy forecast growth next year is 2 percent, 2 percent minus 2 percent equals zero. You are pretty much at the recession stage, yeah," she added. However, Legarde expressed optimism for the struggling Americans, a 12-and-a-half million of which lost their jobs in the great recession with the economy stumbling along since late 2007.

"Well, I would say there is good news lurking out there. In particular the fact that the housing market is picking up is in our view a clear sign the situation is improving," she said. "When you see that the financial institutions have been clearly strengthened, restructured and made a little bit safer and that the housing market is picking up, that's not bad," she added.

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