with ruining the US economy, he's now trying to do the same to the
world's economy.
larry
http://www.businessworld.ie/livenews.htm?a=832297;s=rollingnews.htm
US deficit threatens world economy - IMF
Thursday, January 08 08:43:14
(BizWorld)
The US is running up a foreign debt of such record-breaking
proportions that it threatens the financial stability of the global
economy, according to a report released today by the International
Monetary Fund (IMF).
Prepared by a team of IMF economists, the report sounded a loud alarm
about the shaky fiscal foundation of the US, questioning the wisdom
of the Bush administration's tax cuts and warning that large budget
deficits pose "significant risks" not just for the United States but
for the rest of the world.
The report warns that the US' net financial obligations to the rest
of the world could be equal to 40pc of its total economy within a few
years - "an unprecedented level of external debt for a large
industrial country," which could play havoc with the value of the
dollar and international exchange rates.
The dangers, according to the report, are that the US' voracious
appetite for borrowing could push up global interest rates and thus
slow global investment and economic growth.
"Higher borrowing costs abroad would mean that the adverse effects of
US fiscal deficits would spill over into global investment and
output," the report said.
The report also said that the dollar had been hurt by the mushrooming
US current account and budget deficits, which could crowd out private
investment and erode confidence in the US currency.
"This trend is likely to continue to put pressure on the US dollar,
particularly because the current account deficit increasingly
reflects low saving rather than high investment," said the report.
However, White House officials have dismissed the report as alarmist,
saying that President Bush has already vowed to reduce the budget
deficit by half over the next five years.
The deficit reached USD374bn last year, a record in dollar terms but
not as a share of the total economy, and it is expected to exceed
USD400bn this year.
--
Larry C. Lyons
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Life is Complex. It has both real and imaginary parts.
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Chaos, Panic and Disorder. My work here is done.
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