U.S. debt crisis. Turner says that, while there is a big debt problem in Washington, D.C., politicians aren’t crazy, and some deal will be reached to reduce U.S. debt .
“Admittedly, the U.S. government’s finances are far from pristine, with a record primary deficit representing about 5% of gross domestic product,” he says. “But we believe that even in the irrational, toxic cauldron of contemporary partisan politics, rationality is likely to bubble to the surface: The federal government won’t shut down in the near term, and the Congress should reach a consensus on budget cuts by late summer and tackle Medicare and Social Security entitlements over time.”
Global economic strife. Turner admits Europe has a debt problem, but it’s not an insurmountable one. “Clearly, the debt problem is most acute in Greece and will require a stiff dose of fiscal austerity as a solution,” he says. “[But] we anticipate that the debt will be restructured as soon as it’s prudent for European banks to do so. Will the restructuring be painful? Yes, in our estimation. Will the pain devastate the European Union and the world economically? No, in our estimation.”
Certainly, the world has its share of irrational pessimists. So hearing from a “rational optimist” seems like a breath of fresh air.
Of course, it only works if Turner’s right.
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