Sheila Bair_ the Federal Deposits Insurance Corp. (FDIC) warns that the U.S. could experience a fiscal crisis. According to Bair, if government debt isn't lowered soon, the U.S. may find itself in a financial crisis.
Bair wrote an editorial for the Washington Post, saying:
With more than 70% of U.S. Treasury obligations held by private investors scheduled to mature in the next five years, an erosion of investor confidence would lead to sharp increases in government and private borrowing costs. And while we enjoy a uniquely favored status today - investors still view U.S. Treasury securities as a haven during crises - events in Greece and Ireland should serve as a warning. The yields on their long-term government securities have risen from rough parity with U.S. Treasury obligations in early 2007 to levels that are hundreds of basis points higher.
According to CNBC.com, the federal debt is currently around $14 trillion - that's double the amount over the past seven years. Bair says that the increase is due to the financial crisis, as well as the U.S. government's, unwillingness over many years to make the hard choices necessary to rein in our long-term structural deficit.
Bair also explained that retiring baby boomers will impact government spending heavily as spending on Social Security, Medicare and Medicaid are all expected to make up 45% of primary federal spending. In 1975, that number was only 27%.
tag.Source URL: https://kmhighlights.blogspot.com/2010/11/sheila-bair-warns-of-us-debt-crisis-if.html
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