There's a lack of discussion in Congress about the fiscal cliff but it's a problem that can and will be resolved, former Federal Reserve Chairman Alan Greenspan said in an interview on CNBC.
“The one thing that I think we have to recognize is starting from where we are at the moment, there is no way to resolve this issue without some pain," Greenspan told CNBC's "Closing Bell." "There is no set of policies which can prevent the type of consequences of the imbalances we currently have.”
Greenspan said the reason is because no one wants all of the problems stemming from the fiscal cliff — when tax increases and spending cuts go into effect at the start of 2013 — to hit the economy at the same time.
“It’s an issue we can resolve, and we will resolve it, but let’s remember that’s not where our problem is,” he said.
Greenspan does see problems in the many fiscal deficits of the euro-zone countries.
“It’s like a leaking boat in which we keep bailing it out, and we’re very pleased with ourselves that we continue to keep bailing it out,” he said about Europe. “The problem is, we haven’t fixed the holes yet, and unless and until we can do that, this situation is not going to get resolved.”
Greenspan predicted that the euro would survive only if there a political union arose in Europe because he does not think a financial or fiscal union is stable. He added that the European problems will “absolutely” impact the U.S.
“My concern is that if Europe does not come out of this without some really serious problems, the rest of the world is going to be very troubled,” he said.