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Former Goldman Sachs president says our economic situation 'will end in tears'

Taking the long view is one of those easier-said-than-done propositions, right? For instance, while you might think that the economy has pretty much recovered from the Great Recession of 2008, one prominent financier thinks the problems that caused that big meltdown have been papered over and will come back to hurt us again. And then there’s the little issue of China’s economy surpassing ours soon. John Thornton, the former president of Goldman Sachs (GS), who likes to take the long view, says he’s “feeling uneasy” about the global economy right now and thinks we’re living on borrowed time.

“After the events of 2008, really since then, the central banks either collectively or individually have tried to implement policies which would, in effect, buy time for individual governments to take the actions they should take to put their houses in order,” Thornton says.

“By and large, the governments have not done that. So I feel as though we're sitting in 2016 with many of the same problems that we've had for the last eight or 10 years, they haven't been addressed very forcefully, we're living on borrowed time. And sooner or later, that ends in tears. I'm generally, sort of, uneasy with where things are. And I think by and large, if things don't make common sense, sooner or later, they come home to roost,” he says.

Thornton made these comments speaking at a reception for his son, J.R. Thornton’s new book “Beautiful Country,” hosted at Yahoo in New York City on April 21.

After leaving Goldman in 2003, Thornton followed a number of paths. He went to China to become professor and director of the Global Leadership Program at Tsinghua University in Beijing—one of China’s most prestigious universities. He’s also the chairman of Barrick Gold (ABX), which has had a tough go of it lately as the price of gold has swooned, and where Thornton has been under fire for the pay package he’s received from the Canadian company. And Thornton is the chairman of the Brookings Institution, and has also served on the boards of Ford, Intel, HSBC and News Corp.

Tapping into his China knowledge, I asked Thornton how the Chinese perceived U.S. politics and Donald Trump. He responded by saying he always thinks of China, not surprisingly, with a very long-term view. “Since Nixon, policies haven't changed whole lot,” he says. “So the extent that he [an elected Donald Trump] takes a so-called tougher line…I don't think fazes the Chinese.”

But who would the Chinese prefer to be elected? A Democrat or a Republican? “Conventional wisdom is the Chinese tend to like Republicans more than Democrats, because with Republicans, they know where they stand even if it's a harder line. I think by and large, that's probably true. [And] the degrees of freedom of a president in policy are not as dramatic as the verbiage would have you believe.”

I was curious as to what Thornton thought U.S. business leaders and political leaders could do to improve relations with China. “Until the United States—and I'm talking here about national leaders particularly, political leaders—until they see and treat the Chinese as peers, until that occurs, the relationship will always be, by definition, imbalanced,” he says. “When the Chinese hear things – expressions like 'global standards,' that is code language for American standards wrapped in a global package.”

“And the Chinese want to have a seat at the table, as a peer. China is the rising power and the U.S., by definition, is the relatively declining power,” says Thornton. He notes that this is a tough role for the United States because our "central animating myth is that we're an exceptional country, different than anyone else. And I think it's hard to get our mind around the idea that there may be another country that might not only be our equal, but in economic terms, will surpass the U.S. during our lifetime.”

And who knows what the long-term implications are of that?