Nouriel Roubini ‘splains the deal:
We’re not doing much about the budget deficit. The public debt in the U.S. may go next year from 60 to 90% of GDP. The public debt of the state and local government is already 20% of GDP. The local government another 20% of unfunded liability coming from their own employees’ pension plans and the federal level, another 50% to 100% of GDP of unfunded liability coming from social security, Medicare and Medicaid. So in the U.S., the fiscal problem is very serious. The bond vigilantes have not woken up in the U.S. in the same way as in the euro zone. Unless the U.S. starts to address this fiscal problem, we’re going to see a trainwreck.
Takeaway: No Uncle Sucker bailouts for state or local spendthrifts.
