"Bernanke Warned Congress On Wednesday That The United States Could Soon Face A Debt Crisis Like The One In Greece" → Washingtons Blog
"Bernanke Warned Congress On Wednesday That The United States Could Soon Face A Debt Crisis Like The One In Greece" - Washingtons Blog

Friday, February 26, 2010

"Bernanke Warned Congress On Wednesday That The United States Could Soon Face A Debt Crisis Like The One In Greece"

Bernanke is now joining Rosenberg, Ferguson and Faber, Edwards, Grice and many others in warning that the debt crisis rearing its head in Greece may spread to America, causing U.S. interest rates to climb.

As the Washington Times wrote yesterday:

With uncharacteristic bluntness, Federal Reserve Chairman Ben S. Bernanke warned Congress on Wednesday that the United States could soon face a debt crisis like the one in Greece, and declared that the central bank will not help legislators by printing money to pay for the ballooning federal debt.

Recent events in Europe, where Greece and other nations with large, unsustainable deficits like the United States are having increasing trouble selling their debt to investors, show that the U.S. is vulnerable to a sudden reversal of fortunes that would force taxpayers to pay higher interest rates on the debt, Mr. Bernanke said.

"It's not something that is 10 years away. It affects the markets currently," he told the House Financial Services Committee. "It is possible that bond markets will become worried about the sustainability [of yearly deficits over $1 trillion], and we may find ourselves facing higher interest rates even today."

Yes, massive debt overhangs do matter.

Contrary view: A very smart financial expert disagrees, telling me:

Higher interest rates do not equal a debt crisis.

Greece's situation is not comparable to the US. Greece's situation is comparable to that of California. It makes a big difference whether you control your currency or not.


  1. Bernanke is a shadow Greenspan, who barks when his Wall Street masters command.

    Coming from fool Bernanke, any economic prognostication is suspect. He doesn't know his business and should be (have been) fired. He certainly shouldn't be listened to.

    At the same time, Keynesian solutions won't work this time because we're having an energy crisis not a debt crisis.

    Debt is irrelevant. We don't have the right kind of energy available any more - the cheap kind. The kind that built American- style progress and the kind that made the world's vast petroleum guzzling infrastructure ... profitable.

    I feel like I am the one- eyed man in the land of the blind. I don't understand why people - smart people - don't 'get it'. Nobody listens to me, I'm an idiot!

    The only possible solution is conservation. It is also the only possible outcome. We conserve voluntarily or it is forced upon us by our own consumption. Until conservation becomes the centerpiece - the reason to exist for our economy ... we won't have an economy.

    It's just that simple.

  2. Dick Cheney is going to pop a coronary over that statement Benny boy....oh wait...he already did.

  3. I dunno. I know my own limitations. I live with them. I do not know what the CIA is up to, even if I've seen some of what they did in the past.

    If I had to bet, -were I betting man-, I'd give odds that -as these sovereigns fail and fall-over, one by one, they are going to lie in the dirt like so many feather-pillows ready to cushion the imminent failure and fall of the U.S.

    It's going to look like up to the rest of the world when the US fails and falls, is what I am trying to say.

    Everyone is going to fail and fall down. What matters is -who then gets up first, brushes themselves off, and leads the NEW world.

    Yes, it's going to be dramatic.

    Yes, it's most likely going to be bloody, nuclear, and horrific, because -someone will play the fool, and get the fracas going.

    But the U.S. has spent three times as much on its military budget as the next three contenders combined for the last 65 years. The hardware is poised all over the world to deliver the knock-out punch to any who look like they need -a lesson in economics-.

    "Shock and Awe" was all very antique military hardware when they gave those appliances their public coming out in Iraq.

    Anyone who wants to take the flag off the top of the hill is welcome to try. That's the kind of world it is.

    I suspect when the cards are turned over, we all know who will have the winning hand, and the pearl-handled revolvers under the table to ensure they get to walk away with the prize too.

    Too many pundits today think the world is civilized.

    Think again. No one with any sense believes that old "civilization" fable.

    -Ali Baba and His Forty Thieves-, is more like it. Fast and furious they'll ride from out of no where... disappearing as fast as they arrived.

    And HONESTLY -Ben Bernanke is just a Princeton University stage actor from the Department of Economics and Skirt Chasers at the silly university in New Jersey.

    God, it's all just a glorified high school, post secondary education. The big difference is, there is no big difference. Duh...

    Ever wonder what they teach at Princeton? It's this- Blah, blah, blah, blah.... Hey, pull up your skirt. Princeton is the "Pull up your skirt University."

    Ben Bernanke and Tim Geithner (who hails from Drunken-Dartmouth -LOL!) are about as important as Robert Gibbs, if they each have a slightly longer leash and a better clipped coat.

    This -World War Three- business is serious, and it has been a steady shooting war -now going on ten years.

    And believe me, whether you are Chinese, Iranian -or whatever you are, you know the Americans are just plinking away steady at you with everything in their arsenal.

    It's a very dangerous world right now. But right now, it also looks like no one is going to stand up to the giant who is causing all the trouble in the Global Village.

    It would be a mistake, would be my honest advice.

  4. explain to this so-called expert that the only difference between a country that can print its own money and is in a debt crisis and one that cant is that one defaults through inflation and one defaults. Its a trade-off at best.

  5. Steve from Virginia: You’re confusing two issues: energy and economics. Both are big problems, but they are separate. Big energy price hikes will not preclude full employment. The price of energy (in terms of person hours per kilowatt hour) 200 years ago was at least ten times what it is now, and has gradually declined since then. This did not preclude full employment in 1910, 1870 or at any other time.

  6. Well how about a Ganghi stlye revolution? Non-violant, non-conformism.

  7. We were waiting for the end of the world,
    Waiting for the end of the world,
    Waiting for the end of the world.
    Dear Lord I sincerely hope you're coming
    'Cause you really started something.

  8. Of course, we wouldn't want to cut any military spending, which is more than every other federal agency combined or close one of the 200 military golf courses or one of the over 700 military bases worldwide, because every penny we spend on the Pentagon and military contractors is holy, blessed money and we will be overrun by heathen, brown-skinned infidels if we cut one nickel.

  9. Everything is going according to schedule. Engineer a financial crisis to steal from the public. Get ready to pay twice for everything except the air you breath, and only because they can't capture air and meter it back to the public.

  10. Sorry, Steve from Virginia, they don't get it. Maybe they never will, even as it all slides away. Energy illiteracy prevails.

    It's just that simple.


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