Former Secretary of the Treasury Robert Rubin says he fears the U.S. fiscal deficit could cause a crisis in the bond market that in turn could have "severe effects on our economy."
He also is concerned about "low-probability events” such as a resurgence of terrorism, which, if they occur, “could have huge consequences.”
"If you compare where we were to a year ago, we really are in much better condition," Rubin tells dailyfinance.com. "There are indeed a goodly number of positives."
However, there are also "serious headwinds" to growth, including "our long-term fiscal trajectory (which) is horrendous, unsustainable and dangerous" and undermines confidence, and state deficits "that are going to be have to be closed by their constitutions."
The problems of high unemployment, which Rubin estimates is now 16 percent including temporary workers and those who have given up on finding a job are included, and rising oil prices are additional negatives.
"The probabilities are very unclear," says Rubin. "While the most likely outlook may be the more positive forecast that many forecasters now have, there is a very real chance that what actually happens could fall short of that."
Voice of America reports that Robert Mueller, director of the Federal Bureau of Investigation, says terrorism in general and al-Qaida and its affiliates continue to pose the most significant terrorist threat to the United States.
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