U.S. Treasuries Lose `Risk-Free` Luster 번역

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U.S. Treasuries Lose `Risk-Free` Luster
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Standard & Poors` downgrading of U.S. debt on August 5 merely confirm!ed what any observer of Washington has known for a long time: The U.S. government has no credible plan to tackle the unsustainable deficits forecasted for 2015 and beyond. The new information this summer is that a partisan, gridlocked U.S. political system has injected a new level of uncertainty into markets.


A year ago I asked the question, "How dangerous is U.S. government debt?" At that time, the worry was that medium-term debt dynamics were so adverse that U.S. debt would become unsustainable and that investors would fund U.S. government borrowing only at sharply higher interest rates.


After nine years of declining revenues and increasing expenditures, the United States had amassed $11 trillion in debt, an amount equivalent to roughly 75 percent of annual GDP. More worrying were the projections that the debt would increase sharply from that already high level. Why would the debt increase so much? There has been, for roughly the past decade, a simple imbalance between revenue (not enough) and expenditure (too much). And an important part of the future increases in expenditure are hard-wired through entitlement spending, especially the unfunded liabilities related to healthcare and an aging society.

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Author: Francis E. Warnock, Adjunct Senior Fellow for International Finance
August 6, 2011