Greenspan: Markets will crater if fiscal cliff unsolved

(Bloomberg) Allowing taxes to rise would be a small price to pay to get U.S. lawmakers to accept spending cuts on entitlement programs, even if it leads to a “moderate recession,” former Federal Reserve Chairman Alan Greenspan said today during an interview on Bloomberg Television and also at a panel discussion in Washington.

“Even if we have to pay the cost of a significant rise in taxes to get a significant slowing, and then decline, in social benefits that is a very cheap price,” Greenspan said in an interview on Bloomberg Television’s “In the Loop” with Betty Liu. “A large increase in taxes required to fund what is currently in the books is going to cause a recession,” he said. “If we can get away with that as the only cost to this whole problem, I think that’s a pretty good deal.”