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Guessing the trigger point for a U.S. debt crisis

By Alliance Alert

Guessing the Trigger Point for a U.S. Debt Crisis [View online at Insider Online] by Arnold Kling "It would appear to be quite likely that the United States will experience a debt crisis within the next two decades, unless the path for fiscal policy changes from what is projected by the Congressional Budget Office. However, international capital markets continue to treat U.S. Treasury debt as a fairly safe asset. One way to interpret this phenomenon is that investors expect the United States to take steps to get its fiscal house in order. The assumption that the United States will have the political will to stabilize its fiscal position is based more on hope than on recent experience. If the political process continues to enlarge the government?s commitments to spend in the future, investor expectations will change at some point. That change in market perception is likely to be swift and severe."

Full post as published by Constitutionally Correct on August 27, 2010 (boomark / email).