* Fiscal tightening would hit U.S., world economy hard. * Deadlock dims hopes for housing-led recovery. * Abe cabinet to take office pledging to reflate Japan. The wheels could come off the U.S. economy even before it has shifted out of second gear unless politicians reach a last-minute deal to avoid $600 billion in tax rises and spending cuts that kick in next month. The rest of the world would be unable to avoid the pile-up if America does fly off the so-called fiscal cliff. That is why, even in a holiday-shortened week, eyes will be peeled for signs that Democratic President Barack Obama and his divided Republican ... (full story)