Skip to content

US Can’t default Obama can always print money

August 8, 2011

Former Federal Reserve Chairman Alan Greenspan on Sunday ruled out the chance of a US default following S&P’s decision to downgrade America’s credit rating. “The United States can pay any debt it has because we can always print money to do that. So there is zero probability of default” said Greenspan on NBC’s Meet the Press

“What I think the S&P thing did was to hit a nerve that there’s something basically bad going on, and it’s hit the self-esteem of the United States, the psyche” said Greenspan. Austan Goolsbee, the chairman of the White House’s council of economic advisors, hit out at S&P on the same show, insisting the credit ratings agency had got its math wrong.

“Well, the basic case is they made a $2 trillion math error and forgot to check their work,” he said. “So rating agencies that didn’t make a $2 trillion math error reaffirmed the AAA status. You saw Warren Buffet say that, if they had a AAAA, he would put U.S. Treasurys in AAAA status.”

Following the decision to downgrade America’s credit rating, the head of sovereign ratings at S&P, David Beers, said the Obama administrations analysis of the move was a complete “misrepresentation.”

Greenspan said the current sense of crisis that has unnerved investors is about the euro zone, not the US.

‘The United States was actually doing relatively well, sluggish but going forward until Italy ran into trouble,” he said. “That destabilized the European system, and the crisis re-emerged. Europe is very critical to the United States in the sense not only do we have a fourth of our experts there, but more importantly, significant proportion of the foreign affiliate profits, in fact half of U.S. corporations, are in Europe.”

“When Italy showed signs of significant weakness in selling its bonds—the yield is now over 6 percent, which is an unsustainable level—it created a massive problem within Europe because Italy is a very large country, cannot be easily bailed out and, indeed, cannot be bailed out,” Greenspan added.

Advertisements

From → News

Leave a Comment

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: