Without necessary buffers, the U.S. economy is in the buff. At least, this is the scenario imagined by Former Fed Chairman Alan Greenspan, who says the current financial picture shows the U.S. lacking the necessary “buffers” to react to and protect it from unforeseen crises and ongoing problems:
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“We are running out of buffer in the economy. We don’t have the capability should, for example, we run into a major crisis in the Middle East or elsewhere, where it would require a major increase in our defense budget. Our defense budget is heading in a direction where, in a couple or three years, it will be at the lowest level relative to the GDP since before WWII. We don’t have the physical resources to respond.”
The U.S. might not have the resources to offset or slow global warming, Greenspan went on to say; “We’re already fully committed in the budget. We have no way of finding new revenues.” Adding to the gloom, Greenspan said that valuations in the stock market are rich and the bull market might run into a wall at some point, but there is no way of predicting precisely when.