Friday, July 11, 2008

Undeniable, Unsustainable, and Politically Untouchable

Quoth David Walker, former comptroller general of the US;
“I think the future of the country is at risk. I think we have a number of serious sustainability challenges that current elected officials are not taking seriously.”

Walker estimates that the federal government has run up $52.7 trillion in federal liabilities and unfunded promises. That amounts to $175,000 for each citizen, he says.

If no corrective action is taken, Walker said the potential consequences could be more significant than the subprime mortgage crisis that has hammered the US housing market. “We have a super subprime crisis on the horizon and that super-subprime crisis is the federal government’s finances. The same conditions that led to the mortgage based subprime crisis exist for the federal government’s finances,”
So, how exactly is it again that the government could bail out Fannie Mae or Freddie Mac? This would be that light and airy meringue undergirding the proverbial financial house of cards. In any event, the Christian Science Monitor details the announcement of a new foundation to tackle U.S. federal debt.