Fed: Here’s the Greatest Source of Economic Turmoil

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On Tuesday, Dennis Lockhart, the president of the Atlanta Federal Reserve, warned that financial stability was at risk, citing cyber attacks and underfunded pensions as the likely culprits.

In a conference in Germany, Lockhart noted that small, unexpected economies could be the source of much more profound economic turmoil on a systemic level. Potential weakness showing in the U.S. payments industry, as it continues to advance and fragment, could also leave it vulnerable to cyber attacks which could also create systemic-level problems.

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U.S. Secretary of Defense Leon Panetta, too, warned of the dangers of cyber attacks. A rash of attacks aimed at the banking industry occurred in September and were attributed to Irani hackers, potentially coming as a rebuke for recent U.S. sanctions. Threats range from hackers temporarily halting services up to crippling attacks that could cause real-world, non-cyber damage.

On a lighter note, Lockhart spoke about the risks of the underfunded pensions, but believes that they will be a problem that grows over time and won’t pose immediate, sudden problems.  His stance on cyber attacks is also lighter than Panetta’s, saying that they should be considered a constant risk, but that they are unlikely to have deep, long-lasting impacts.

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