NYT.  Krugman tracks Robert Rubin's views on our rising national budget and trade deficits.  I, like many others, have been a huge fan of Robert Rubin's ability to smell out and defuse a financial crisis.  Rubin is now of the opinion that the US is at risk of a “third-world” financial meltdown scenario over the next decade.  This is something that Warren Buffett recently pointed out:

Since then, however, it's been all downhill, with the pace of decline rapidly accelerating in the past five years. Our annual trade deficit now exceeds 4% of GDP. Equally ominous, the rest of the world owns a staggering $2.5 trillion more of the U.S. than we own of other countries. Some of this $2.5 trillion is invested in claim checks—U.S. bonds, both governmental and private—and some in such assets as property and equity securities.

This matters.  Rubin's opinion is worth its weight in gold.  If the US falls prey to a financial crisis brought on by twin deficits, we will lose the peace — the second pillar of Ronnie Reagan's successful formula: preserve freedom, but win the peace. [John Robb's Weblog]

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