Journaltalk - Introduction to Symposium on U.S. Sovereign Debt Crisis: Tipping-Point Scenarios and Crash Dynamics

Introduction to Symposium on U.S. Sovereign Debt Crisis: Tipping-Point Scenarios and Crash Dynamics

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  • Tyler Cowen
Keywords Sovereign debt crisis, tipping point, crash dynamics
Volume Number 9
Issue Number 1
Pages 21-23
File URL Introduction to Symposium on U.S. Sovereign Debt Crisis: Tipping-Point Scenarios and Crash Dynamics
Publication year 2012

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  1. In his introduction, Professor Cowen says that the U.S. has
    10-20 years before a “tipping point.”

    I don’t see anything like that time frame. I am not arguing. It is a
    serious question and it would be great if he iscorrect.

    I would appreciate any explanation as to how things will hold together that long?

    I understand that the question is kind of asking to prove a negative so
    here is my perspective. I would love to be wrong about it as well.

    Mankind’s first attempt at guaranteeing retirement, health care, financial
    security, housing, employment, and sustained economic growth has gone badly
    awry. The attempts at sustained economic growth have already created and
    are maintaining our current economic difficulties.

    The creation of the Euro allowed a number of European countries to sustain
    very destructive economic policies. While most of the media attention is
    focused on debt issues, the underlying structural problems are really what
    will bring the continent down. Europe’s recession/depression will likely
    trigger China and Japan’s underlying structural problems and a
    recession/depression in those countries.

    Obviously, if all that takes place, the U.S. and the rest of the world will
    follow. My assumption has been that the Fed, ECB, BOJ, and Chinese
    authorities would “quantitatively ease” things to get past the U.S.
    elections. I am no longer sure that it will last even that long.

    My number would be 6 – 18 months, not 10-15 years.

    I would strongly prefer to be wrong, so any help in
    straightening out my thinking would be greatly appreciated.

    John Bailey

    posted 11 Feb 2012 by John Bailey

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