Debt fear maybe misguided, economists say

DAVOS, Switzerland, Jan. 29 (UPI) -- The fear of rising government debt could be premature in many nations, including the United States, economists in Davos, Switzerland, said.

In an interview, Chief Economist at Standard Chartered Bank Gerard Lyons said the primary repercussion from mounting debt is a decline in government spending and long-term investment, not the often-stated fear of countries going into default, MarketWatch reported Friday.

Nobel laureate Joseph Stiglitz, a professor at Columbia University, said the U.S. economy would benefit more from another shot of stimulus spending than from the three-year freeze on most federal spending announced by President Barack Obama in his State of the Union address.

Also attending the World Economic Forum in Switzerland, Chair of the House Financial Services Committee Barney Frank, D-Mass., said U.S. spending was misplaced. "If we do not in the United States begin now a reduction in spending on the military … we're not going to get out of this," Frank said.

Fear of debt has been tagged as the most often-named issue among the economists and world leaders gathered at the forum, MarketWatch said.

In the United States, decisions are now "constrained by long-term deficit fears," Frank said.