“Will the US go into technical default? This is quite possible,” Philippa Malmgren, a former economic advisor to George W Bush and the president and founder of Principalis Asset Management told CNBC on Thursday.

While this is a serious problem in Malmgren’s view, she said the solution is easy enough.

“Yes it is a serious problem but the US can easily fix it by having everybody work 10 years longer which they'll do anyway,” she said.

Any recovery of the US economy will be based primarily on manufacturing, agriculture and innovation in Malmgren’s view but the banks need to watch out if they continue to refuse to lend to American businesses and consumers.

“I think lending in the US is a great business with great returns. If big banks cannot and will not lend then are there smaller local banks who will Hoover up the best loans,” she said.

With tensions high over the debt crisis in Europe, Malmgren said she expects several rounds of haircuts on bonds that will ultimately see a number of euro zone countries devalue.

“We could have a Northern Rock given the denial of overnight funding to many banks. Central banks will provide the liquidity for that but the bigger issue is how to get Greece and others to grow again. That requires devaluation,” she said.