“US borrowing vulnerable to rate spike- Greenspan” (Reuters) Fri Jun 18, 2010

[jody]

US borrowing vulnerable to rate spike- Greenspan

(Reuters) - Perceptions that the United States has a large capacity to borrow are misleading and the government could have to pay higher interest rates to finance a growing deficit, Alan Greenspan said in an opinion piece published by the Wall Street Journal.

"Despite the surge in federal debt to the public during the past 18 months -- to $8.6 trillion from $5.5 trillion -- inflation and long-term interest rates, the typical symptoms of fiscal excess, have remained remarkably subdued," former Federal Reserve Chairman Greenspan said.

* * * * * * * * * * * *

"If Treasury net debt issuance were to double overnight, for example, newly issued Treasury securities would continue free of credit risk, but the Treasury would have to pay much higher interest rates to market its newly issued securities," he said.

* * * * * * * * * * * *

Only politically toxic cuts or rationing of medical care, a marked rise in the eligible age for health and retirement benefits, or significant inflation, can close the deficit, according to Greenspan.

So we can still borrow but at increasing interest rates OR let inflation take the US and world economy to the inevitable new steady state.

[DJ13]

1. Sounds like a sales pitch for the austerity program crowd

[jody]

2. Many states look to CA as what the future holds for them. Given CA's current budget problems, is

austerity the only solution or does CA have other alternatives?

[DJ13]

3. Ca has options, but like Greece they cant print money

Still, Greenspan isnt talking about states there, he's representing the slash federal government aid crowd.

[pscot]

4. Fuck Greenspan

He's a tool.

[Warpy]

5. Why is anyone donating time and space to that

fish faced enemy of the people who has been wrong about everything he's ever done? His record is almost as good as Stupid's in screwing this country up.

That man needs to retire, to find a garden to sit in and drool.

Please, someone, put him out to pasture.

[girl gone mad]

6. Wrong on both counts.

"we can still borrow but at increasing interest rates OR let inflation take the US and world economy to the inevitable new steady state."

Interest rates are not under pressure and we are currently facing deflation, not inflation.

All the "what ifs?" in the world won't change these two simple realities.

[bossy22]

9. ding ding ding ding

couldnt say it better myself.

[PM Martin]

7. There is no inflation now.

So the borrowing can continue for economic stimulation for the time being.

[bossy22]

8. and you can get hit by lightning on a sunny day walking home from work

it doesnt necessarily mean its likely such event is going to happen. Greenspan is just trumpeting the deficit hawk crowd and gives very little evidence to back it up except saying "hey it happened once before"

Read this article by paul krugman http://krugman.blogs.nytimes.com/2010/06/19/the-facts-have-a-well-known-keynesian-bias/