Future of U.S. economy: from 'crisis' to 'armaggedon'

While Bush administration announced that it will have to ask Congress to raise the debt ceiling - currently at $ 7.384 trillion - in order that it can organise the government’s massive borrowing needs, economic experts all over the country express their deep concerns about Bush's handling of the sorry-state of the U.S. economy.
Princeton economics professor and NYT columnist Paul Krugman told Reuters that the "U.S. economic crisis a question of when, not if". Crisis might take many forms, he said, but one key concern is the prospect that Asian central banks may lose their appetite for US government debt, which has so far allowed the United States to finance its twin (current account and fiscal) deficits. “So if you ask the question do we look like Argentina, the answer is a whole lot more than anyone is quite willing to admit at this point. We’ve become a banana republic,” he said.
Stephen Roach, the chief economist at investment banking giant Morgan Stanley - famous for being bearish - predicted that America has no better than a 10 percent chance of avoiding economic "armageddon". In a meeting with fund managers he argued that the U.S.' record trade deficit means the dollar will keep falling. To finance its current account deficit with the rest of the world, he said, America has to import $2.6 billion in cash every working day. That is an amazing 80 percent of the entire world's net savings. He also notes that household debt is at record levels. Twenty years ago the total debt of U.S. households was equal to half the size of the economy - today the figure is 85 percent.
Plus: Nobel prize-winning economist Joseph Stiglitz and Pete Peterson make suggestions how to fix the mess.