Fwd by Simon McGuinness [Dublin] <[EMAIL PROTECTED]>
(Look at how the "international community" are abandoning Bush to his fate. Even Greenspan has decided not to help get the President out of his dilemma. They are hanging him out to dry, and all his neo-Con buddies can come up with is - 'its the Democrats fault'. Were heading for the buffers and the brakeman is in the bar.)
********************************* IMF chief calls for dollar action
The US needs to do more to reduce its deficits, the main engine driving the dollar to record lows, the head of the International Monetary Fund has said.
In an interview with the IMF's in-house magazine, Rodrigo Rato said the
US could not rely on market forces alone to avoid a "traumatic
situation".
The dollar has weakened sharply against most major currencies in recent
weeks.
US Treasury Secretary John Snow backs a "strong dollar", but has said it
is up to the markets to set its level.
In comments made in the UK earlier this week, Mr Snow made it clear that
he saw slow European growth as a big part of the problem, driving up
deficits by making the US the importer of last resort.
Bridging the gap
Mr Rato's interview appeared on the eve of the G20 meeting of major
countries' finance ministers in Frankfurt, at which the weakness of the
dollar and the spiralling US deficits are likely to take centre stage.
The finance ministers of Argentina, France, Japan, Russia and South
Korea will not be present at the meeting because of domestic
engagements, it emerged on Friday afternoon.
Mr Rato acknowledged that the reduction of the current account deficit -
the gap between money coming in and going out of the US - was
everybody's business. And he agreed that Europe - and Japan - were failing to pull their
weight.
But imbalances like that could not be fixed solely by the market, he
insisted. That "could be much more costly and risky".
The US needed to take action itself, not least because there was a limit
to how much other countries could continue to fill their coffers with
dollars - the mechanism which allows both the current account deficit
and the massive public budget deficit.
"The question is whether the build-up is sustainable, and there's
growing evidence that (it) is very big and the markets are asking for a
change of policy," Mr Rato said.
"I don't think it's a traumatic situation, but I do think a change in
policy is needed to avoid getting into a traumatic situation."
US Federal Reserve chairman Alan Greenspan voiced his agreement on
Friday.
"Current account deficits, even large ones, have been defused without
significant consequences, but we cannot become complacent," he wrote in
the text of a speech due to be delivered to the G20 conference on Friday
evening.
The budget deficit needed urgently to be reduced, he said. "We hope this will be reflected in the new administration's policies as
soon as possible."
Bigger bills
On Thursday evening, the US Congress passed a bill to keep funding the
US's massive public debt.
The bill, which added $800bn to take the total debt allowable to $8.2
trillion.
The deficit currently stands at more than $400bn for 2004.
Republicans in Congress blamed the red ink on Democrat-backed spending,
and said they were trying to protect benefits for older citizens.
Democrats, however, point to a 15% increase in discretionary spending
over the life of the last Republican-controlled Congress, coupled with
massive tax cuts.
Republicans, they said, were effectively passing on the responsibility
for their spending to future generations.
"I want someone to explain to me how it can be moral for a father to
stick his kids with his bills," said Representative Gene Taylor from
Mississippi.
Story from BBC NEWS: http://news.bbc.co.uk/go/pr/fr/-/1/hi/business/4025139.stm
Published: 2004/11/19 13:25:31 GMT
� BBC MMIV
