Ex-Treasury Secretary Rubin warns over deficits

Former U.S. Treasury Secretary Robert Rubin said Tuesday that the U.S. may
experience serious financial problems if it continues running current account
deficits over a long period of time. The U.S. would risk a “sharp decline in the
dollar and a very substantial increase in interest rates” if foreign buyers
reconsider their demand for U.S. assets, Rubin said in a panel discussion at the
Concord Coalition’s 12th Annual Economic Patriots Dinner. Rubin said he fears
the more time that passes before deficits are reined in, the greater the risk of
a financial markets jolt and the greater the “magnitude” of the impact. Rubin
added that “this can’t go on,” referring to the deficits. He said that if the
deficits do continue, the U.S. may risk the kind of economic shock most
Americans alive today have never experienced.

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