Tuesday, February 15, 2011

Robert Rubin Warns New Deficits Could Result in a Crisis at Any Moment

Former Treasury Secretary Robert Rubin's warnings about the economy and debt situation are getting louder and louder. Speaking at CME Group’s Global Financial Leadership Conference in Naples, Fla, he warned that Federal deficits are on an unsustainable trajectory, and large state and local budget gaps must be closed. He also said:
I think the prospects for the United States economy for both the short term and the long term are the most complex and uncertain of my adult lifetime.That obviously creates an extremely difficult decision-making environment for investors, for business people, for policymakers and for our people...

Substantial new deficits could also lead to sudden and unexpected disruptions in market psychology and, following from that, disruptions in the bond market....
He also added that a weaker dollar could lead to dangerous competitive devaluations and that those devaluations could lead to financial chaos, or restrictive trade measures elsewhere in the world. Commodity prices are already increasing as a result and could undermined the development of additional demand, he said, but the most serious problem is that the new program of quantitative easing has heightened existing concern that we might, at some point, monetize our debt to try to inflate our way out of our fiscal problems.

Rubin noted the box the U.S is in given that the politics of deficit reduction are enormously difficult, because the American people do not want tax increases or spending reductions that would affect them.


  1. The gimme-gimme sector of the American populace need to grow up. They're going to, whether they're forced to it or accept it themselves. Cuts are coming. MASSIVE cuts. Raising taxes can only make things worse. MASSIVE CUTS are the only answer. Start with zer0bama's budget proposal. Throw it out, entirely. Then say goodbye to the Ed. Dept, Energy, Commerce, Arts, PBS, for starters.

  2. Dear Moron Rubin: Maybe you should have thought about the debt when you sent Moron Summers after Brooksly Born.

    The effing bailouts to save the financial system you helped destroy are a massive part of our deficit and debt now.

  3. It is a total screwed up mess. If Watson the IBM computer takes over America, all you losers will be fired! What happened and is happening is not rocket science.

  4. I really don't think Mr. Rubin has the right to say anything about the debt since he is responsible for a huge part of it.

  5. Massive spending has been in the hands of a congress controlled by the democrats since 2006. When Bush,in 2007, tried to impose regulations on Frannie Mae and Freddie Mac Barnie Frank and Maxine Waters went apoplectic with Maxine Waters saying "if it ain't broke don't fix it". And who said that two wrongs make a right? In other words, the CONTINUED spending of Obama is a gross betrayal of this country!

  6. If the Republicans don't get spending under control in the current session then I'd say the USA is doomed. They're our last chance and the deficit/debt is the number 1 reason we put them in office.

  7. These governments bonds are worthless already and will never be paid back. Simply because the future generations will refuse to continue paying interests on the enormous debts that were created by the current generation.
    So they will default on these bonds, at best repaying them at par when inflation has reduced their real value to 10% of what it used to be.
    Get out while you can.