An Economy On Thin Ice

From the Washington Post, an essay by Alan Greenspan's predecessor as chairman of the Federal Reserve board, Paul Volcker:

The difficulty is that this seemingly comfortable pattern can't go on indefinitely. I don't know of any country that has managed to consume and invest 6 percent more than it produces for long. The United States is absorbing about 80 percent of the net flow of international capital. And at some point, both central banks and private institutions will have their fill of dollars.

I don't know whether change will come with a bang or a whimper, whether sooner or later. But as things stand, it is more likely than not that it will be financial crises rather than policy foresight that will force the change.

Click here for the rest.

Okay, when Reagan-era conservatives are sounding the same red alerts about the economy that radical left-wingers are sounding, I think it's time for everybody to start freaking out.

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