These are not uninformed people talking about this.
ECONOMIC EXPERTS OUTLINE PRECARIOUS FINANCIAL SITUATION
WASHINGTON -- In this season of political disunity and destructive campaigning, one diverse group of Americans is coming together on a campaign subject that ought to be of greatest importance to us all -- the financial stability of the nation.
Paul Volcker, former chairman of the Federal Reserve Board and a Republican, says we face a 75 percent chance of a financial crisis within five years. Robert Rubin, former economic chief under President Clinton, says we are confronting "a day of serious reckoning" and that "the traditional immunity of advanced countries like America to a Third World-style crisis isn't a birthright."
But perhaps Peter Peterson, former chairman of the Federal Reserve Bank in New York, chairman of The Blackstone Group and a moderate Republican, put it most succinctly. "We are not paying our own way," he says. "As a nation, we are running on empty. If the ultimate test of a moral society is the heritage it leaves to its grandchildren, I would say we are failing that test."
In short, these men -- our best and brightest -- are telling us that, while the nation is fixated on delusions of empire in the Near East and illusions of omnipotence, we are simply going broke.
"There are three realities we must deal with," Peterson said at a recent meeting at the Institute for International Economics here. "First, we are risking our national security to fight two wars: one overseas and one at home. We have seriously underestimated the cost. Our military is stunningly successful, but it is also stunningly expensive. One billion dollars a week for just two divisions in Iraq -- and we have no war budget!
"The second new reality is our huge foreign currency account deficits. Currently we import $4.4 billion of foreign capital a day. Even the International Monetary Fund is giving us hell. Our borrowing is at unprecedented levels for an industrialized power. None of the specialists believe that this is sustainable, and half of the experts say we risk a hard landing. America must consume less and save more, export more and import less."