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Monday, June 11, 2012

Reynolds Warns of a Second Recession

News summary by MFWire's editors

Could the nation be facing a second recession? Yes, if Democrats and Republicans don't reach a budget-balancing deal by December, says Putnam [profile] CEO Bob Reynolds.

Reynolds predicted at a Boston College investing conference this past week that a bill will be due by New Year's Day 2013, reports Jerry Kronenberg for the Boston Herald.

"Even if we agree to punt the status quo forward by a year which, by the way, is what I think is going to happen America is going to have to (use) 2013 to debate and choose between just drifting toward insolvency or changing course," Reynolds said.

A second recession would trigger across-the-board spending cuts and likely tax hikes, Reynold said. This could cause the U.S. to fall behind Europe and Asia's developed nation in the "race to solvency," which could shut the U.S. out of credit markets, he said.

"Global capital flows are the lifeblood of national economies, and America needs access to them as much as anyone. So the way I see it, we really don't have a choice about coming to grips with our debts and our spending," Reynolds said. 

Edited by: Irene Park

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