Goldman Sachs’ Lloyd Blankfein sounds alarm over ‘fiscal cliff’
The United States’ credit rating and status as the world’s reserve country would be threatened if the federal government doesn’t resolve the “fiscal cliff” before automatic spending cuts and tax hikes kick in at the end of the year, Goldman Sachs Chief Executive Lloyd Blankfein said Monday.
Though Blankfein said he was optimistic that political leaders would reach a short-term deal after the November election and perhaps reach a compromise by the middle of next year, a solution was far from certain. If unresolved, the cost could be an estimated 4% of gross domestic product, he said.
“There’s a substantial risk that we don’t get action, and it will be very, very bad for the rating,” Blankfein said, speaking on a panel at the Clinton Global Initiative annual meeting here. “And it won’t be just because of our credit. It will be because of the dysfunctionality of the government, and we will deserve to be graded as a dysfunctional government.”
Continued government inaction would make U.S. government debt less desirable, he said.
“And why should we be the reserve currency of the world if we can’t manage the health of the economy and therefore the value of the currency?” asked Blankfein, who is also Goldman’s chairman.
Read the full story at: LAtimes.