Peter Peterson, the iconic former Commerce Secretary and co-founder of Blackstone Group, is concerned about the United States in light of Greece's debt crisis.
Of course we are in a much stronger financial and economic position than the beleaguered European nation, he acknowledges. "Nonetheless, there are important lessons to be learned about the benefits of long-term planning and maintaining fiscal health and flexibility," he writes in USA Today
"Without question, the United States remains on a fiscal path that is unsustainable and dangerous by any international standard."
He cites a recent Congressional Budget Office estimate that the federal government's debt will exceed 100 percent of GDP by 2040 based on current policy. That would do major damage to the economy, the CBO warns.
"Interest costs alone will reach $5.5 trillion over the next decade, and are on a path to exceed all federal revenues," Peterson says. "That's an absurd fiscal trajectory for any country to put itself on, especially a strong nation such as America."
The CBO projects a budget deficit of $486 billion, or 2.7 percent of GDP, for this year, little changed from $485 billion last year. But it sees the number soaring to $696 billion in 2020.
As for Greece, star investor Wilbur Ross, CEO of WL Ross & Co., sees hope for success in its negotiations with its European creditors on a debt restructuring. That's because the alternative would be so unpalatable.
The odds of Greece staying in the eurozone are 60 percent, he told CNBC
. If Greece abandoned the euro, that would mean a return to the drachma.
"The drachma-ization would be terrible for the whole country, including for the banks," because euros in foreign accounts and "under mattresses" wouldn't come back into circulation," Ross said. "My guess is you would have the drachma trading somewhere between 25 cents to 50 cents on the euro. So it would be a pretty bad haircut for the people."
It's helpful that Germany wants Greece to remain in the eurozone to avoid inviting other nations to exit, he said. And the Greek people and leaders also want to stay.
© 2023 Newsmax Finance. All rights reserved.