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Although David
Walker's views on the precarious state of our nation's finances are no
stranger to the Financial Armageddon blog -- or
to my book of the same name -- I sense an
even greater sense of urgency than in the past in his remarks from
a recent CNBC
interview, "US Less Than 3 Years
Away From Being Greece: Walker":
The US is only
a few years away from reaching the same debt levels that pushed Greece to the
brink of ruin, former comptroller general and head of the Comeback America
Initiative David Walker said.
As the ratio of
its debt to gross national product eclipsed 100 percent and surged toward 150
percent, Greece has twice in the last two years nearly defaulted on its debt.
Only successive bailout packages from the European Union and International
Monetary Fund prevented catastrophe.
When tolling up
all the US debts, including huge unfunded liabilities to Social Security and
Medicare, the US is on dangerous ground, Walker said in a CNBC interview.
"We are
less than three years away from where Greece had its debt crisis as to where
they were from debt to GDP," he said.
The US is
nearing the 100 percent threshold which historically shaves about one
percentage point off GDP, which was just 1.3 percent for the second quarter
and 0.4 percent for the first quarter.
With the recent
increase in the debt ceiling and continued higher budget deficits at the
federal level, the US is on course for its own crisis, Walker said.
"We are
not exempt from a debt crisis," he said. "We're never going to default,
because we can print money. At the same point in time, we have serious
interest rate risk, we have serious currency risk, we
have serious inflation risk over time. If it happens, it will be sudden and
it will be very painful."
Tick-tock,
tick-tock, tick-tock.
Click here to
read (and listen to) the rest.
Michael J. Panzner
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