Reply #28: Now here's some economists speaking with a voice of reason IMHO [View All]

[54anickel]

http://www.taipeitimes.com/News/worldbiz/archives/2004/02/11/2003098358

The US economy is enjoying a growth spurt that will not last beyond this year because it is driven by military spending and tax cuts while the George W. Bush administration turns a blind eye to a looming deficit crisis, American economists said in Havana on Monday.

"Developing countries that still rely on the American market as an engine of growth should be cautious about expecting too much after 2004," said University of Texas professor James Galbraith at an annual economists conference on globalization issues hosted by Cuba.

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"The current administration in Washington is making no serious effort to deal with the looming failure of its programs," McFadden said in a lecture to 1,300 economists from 43 countries.

"There is a high risk that social and financial turmoil will result, threatening the continued prosperity of the US economy and the stability of the globalized markets in which it is a key player," he said.

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McFadden said the unregulated flow of speculative "hot money" had created global financial volatility and burdened developing nations with unpayable debt and attacks on national currencies.

The support provided to nations in difficulties by the International Monetary Fund is often "cold comfort" due to painful austerity demanded in return for bailouts.

"We need to cool down hot money, keeping long term flows while reducing short term volatility, and warm up the cold comfort currently provided by the IMF to countries that are in trouble," he said.