IMF warns US over mounting deficit

[Drift3r]

IMF warns US over mounting deficit


Wed Aug 27, 5:45 PM ET
By Alan Beattie in Washington

The US will remain the main engine of growth for the global economy but needs a plan to control its swelling budget deficit, the International Monetary Fund has warned.

Leaked drafts of the IMF's twice-yearly world economic outlook, due to be released at its meetings in Dubai next month, show upward revisions to US growth predictions and a downgrading of growth prospects in the eurozone.

The latest figures show the global growth forecast slightly higher than the IMF's previous prediction in April, at 3.2 per cent in 2003 and 4 per cent in 2004. The US forecast has been revised up to 2.4 per cent this year and 3.7 per cent next year, with the eurozone forecast more than halved to 0.5 per cent this year.

The report says that while some of the worst risks to the global economy have lessened, it is still vulnerable to a sharp correction in global current account imbalances, and urges central banks to keep interest rates low and cut further if necessary.

It also enters the highly contentious area of exchange rate policy in Asia, urging Asian countries outside Japan to let their exchange rates rise and saying that their massive build-up of dollar reserves has been excessive.

Central banks in the large Asian economies, particularly China, Taiwan and South Korea, have bought hundreds of billions of dollars in US assets since the end of the Asian financial crisis in 1998. The report says that the manipulation of currencies in Asia has added to global economic imbalances.

The report warns that while fiscal stimulus has helped keep the US and global economy going, there is no strategy for returning public finances to balance in the medium term. "Implementation of a credible medium-term framework to restore broad balance . . . over the cycle is now even more pressing."

The report, on which the IMF declined to comment on Wednesday, represents an intensification of the fund's warnings that US tax cuts and public spending will create a structural deficit, ultimately pushing up interest rates and restraining growth.

http://story.news.yahoo.com/news?tmpl=story&u=/ft/20030827/bs_ft/1059479365408

 

[BOBDN]

So this would make the Bush legacy what?

War and Poverty.

Great job George.

I'm sure he'll leave it for someone else to clean up and the Republicans will blame whoever is in office next.

Unless, of course, it's another Republican. In that case they'll just keep playing their game of fiscal Russian Roulette with the economy and chicken with terrorists.

After all, a New American Century doesn't come cheap. Well, maybe for them it does. But not for us.

 

[BaliBabyDoc]

Those eggheads at IMF don't know diddly. The CBO just reported that our current trajectory has America well on the way to growing out of deficit by 2015. Granted, they also assume we begin killing off people collecting SS, SSI, Medicare, and Medicaid.

But look on the bright side, with all of those nonproductive citizens out of the way we can dedicate more of our wealth to bringing justice, democracy, and Christianity to the barbarians sitting on our oil.

 

[Bowfinger]

Originally posted by: BaliBabyDoc
Those eggheads at IMF don't know diddly. The CBO just reported that our current trajectory has America well on the way to growing out of deficit by 2015. Granted, they also assume we begin killing off people collecting SS, SSI, Medicare, and Medicaid.

Now you're in trouble. Bush wasn't going to unveil this new plan until after he formally announces he's running for re-election.

 

[BaliBabyDoc]

Why not reveal this great plan? The old people were going to die eventually . . . we're just expediting the process. Once the herd is culled we can cut taxes and tell the world to kiss our pinky rings made with Sierra Leone diamonds as we all drive H1 Hummers burning leaded gasoline.

 

[tcsenter]

Those eggheads at IMF don't know diddly. The CBO just reported that our current trajectory has America well on the way to growing out of deficit by 2015. Granted, they also assume we begin killing off people collecting SS, SSI, Medicare, and Medicaid.

We were thinking about sending them all on a one-way trip to spend the summer in France.

 

[Mookow]

Originally posted by: tcsenter

Those eggheads at IMF don't know diddly. The CBO just reported that our current trajectory has America well on the way to growing out of deficit by 2015. Granted, they also assume we begin killing off people collecting SS, SSI, Medicare, and Medicaid.

We were thinking about sending them all on a one-way trip to spend the summer in France.

That would save us on the funeral costs...

EDIT: Soooooooooooooooooooooo wrong