Political advisor James Carville knew what he was saying when he coined the phrase, “It’s the economy, Stupid,” during Bill Clinton’s 1992 election campaign. Nearly 25 years later, the economy is still foremost on voters' minds. Forty percent of Americans believe that economic issues are the most important problems facing this country today, according to a recent Gallop poll. Retired four-star general and former 2004 Democratic presidential candidate Wesley Clark agrees. He recently sat down with Yahoo Finance at the Milken Institute Global Conference in Los Angeles to discuss the five biggest current threats to the U.S. economy.
Terrorism
Terrorism is a problem that leaks its way into all facets of life, including the economy. Clark believes that a terrorist attack or threat would have an incredible impact on U.S. business and world commerce. “If terrorism takes root—if it hits an airliner, it disrupts world commerce. If it hits ocean ships, it’s a big deal in international trade,” he says. The terrorist attacks on September. 11, 2001, for example, cost an estimated $3.3 trillion, according to research by The New York Times.
Cybersecurity
“We invented the Internet in America, well, paradoxically we’re the most vulnerable to its destruction,” explains Clark. Cyberattacks threaten both intellectual property and the Internet itself, yet many businesses don’t make online security a priority. Cybercrime costs are projected to reach $2 trillion by 2019, according to Juniper Research. IBM CEO Ginni Rommety has said that cybercrime may be “the greatest threat to every business in the world.” And the World Economic Forum has said that a vast amount of cybersecurity threats go undetected because of a lack of funding.
Financial system stability
Debt is like rocket fuel, says Clark. "If you have the right amount, you take off, but if you take on too much, you blow up.” Clark believes we’re maxed out on debt, “and at some point, someone blows the whistle and says, ‘Oh, I don’t think that debt is going to get repaid.’ And then there’s a crisis of confidence in the debt, and boom, you’re into a recession or worse.”
Emergence of China as a superpower with global ambitions
Clark is afraid of what might happen if the Renminbi, the official currency of China, becomes the global reserve currency. He believes that China is pushing for the change, but that it is premature in its ambitions. Last August, China surprised investors with a devaluation that brought the Yuan down 5% in one week, hurting global markets and currencies. “But China clearly has these global ambitions,” says Clark. “They have the military forces, they have the population and demography.”
Climate change
“The Paris Accord has got to be implemented, and even that is too little too late,” says Clark of the 2016 United Nations agreement negotiated by 195 countries aiming to mitigate greenhouse emissions starting in 2020. Clark doesn’t think we’re going to be able to prevent developing countries from using coal-power and hydrocarbon fuel vehicles. “We’re not going to jerk that to a stop,” he says.