Tags: Walker | US | Greece | debt

Former Comptroller Walker: US May Turn Into Greece in 3 Years

Tuesday, 02 Aug 2011 11:16 AM

The United States is just three years away from running up debts so high it will resemble Greece, which has threatened the stability of the entire European financial system, says former comptroller general and head of the Comeback America Initiative David Walker.

Greece's debt-to-GDP ratio is pushing 150 percent and has nearly defaulted on its debt twice in two years.

The U.S. debt-to-GDP ratio is approaching 100 percent. And the United States just barely avoided default by raising its own debt ceiling.

"We are less than three years away from where Greece had its debt crisis as to where they were from debt to GDP," Walker told CNBC.

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Monetary policy can steer the country away from defaulting but the country cannot avoid crises that come with carrying onerous debt loads.

"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," he said.

Congress is set to give final approval to lifting the government's $14.3 trillion debt ceiling and avoid default.

Credit ratings agencies have said they would have stripped the government of its AAA debt ratings if that were to happen, and the verdict is still out whether a downgrade is still unavoidable due to ongoing debt burdens.

"The resolution to the debt ceiling does remove one cloud of uncertainty but it does not change the economic reality," says Greg McBride, senior financial analyst at Bankrate.com, according to Reuters.

"It's going to take years to come out of this. We're sitting in the terminal waiting for the economy to take flight and instead it's just being delayed month after month after month."

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The United States is just three years away from running up debts so high it will resemble Greece, which has threatened the stability of the entire European financial system, says former comptroller general and head of the Comeback America Initiative David Walker. Greece's...
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