Greenspan Warns About Trade Deficit Impact

[Zorra]

By JEANNINE AVERSA
Associated Press

WASHINGTON - The persistence of bloated U.S. trade deficits over time can pose a risk to the U.S. economy, which thus far has proven resilient, Federal Reserve (news - web sites) Chairman Alan Greenspan (news - web sites) warned Friday. Policy-makers must not get lulled into a sense of complacency, he said.

The broadest measure of trade, called the current account deficit, swelled to an all-time high of $166.2 billion in the second quarter of this year, the most recent period for which this information is available.
snip---
So far, foreigners are willing to lend the United States money to finance the current account imbalances, Greenspan pointed out. The worry, however, is that at some point foreigners might suddenly lose interest in holding dollar-denominated investments. That could cause foreigners to unload investments in U.S. stocks and bonds, sending their prices plunging and interest rates soaring.
snip----
Reducing the U.S. federal budget deficit, Greenspan said, would be an important action to boost U.S. savings. Continued flexibility in the U.S. economy also has been important in the economy's ability to absorb and rebound from economic shocks, he said.

http://story.news.yahoo.com/news?tmpl=story&cid=509&e=3&u=/ap/20041119/ap_on_bi_ge/greenspan

More tax cuts and eternal war should really cut the deficit, huh?

Welcome to Bu$h's Third World America.

[TexasChick]

1. Good grief! Lord, please help us find something to impeach this Chimp!

Please, God, help us save this country before it's too late!


:cry:

[Zorra]

2. Amen.

[Massachusetts]

7. God?

God doesn't have anything to do with this! We have to "BE THE KEEPERS OF THE WATCH." Most Dems and rethugs CANNOT BE TRUSTED with OUR country anymore!:grr:

[TexasChick]

8. That's true, but I still would like to keep praying though because I

want to do so.

[qanda]

3. The US as a Net Debtor:

The Sustainability of the US External Imbalances

Very long, but seems interesting

http://www.stern.nyu.edu/globalmacro/Roubini-Setser-US-External-Imbalances.pdf

[hatrack]

4. My, Mr. Greenspan. How perceptive of you.

:puke:

[Strawman]

5. Guess we'll have to throw old people into the poorhouses

And scrap Social Security now. They've become a burden to our "entrepeneurs" with all their wasteful food and shelter and medicine.

[Tempest]

6. Greenspan's a whore

Before the election Greenspan stated the deficit was sustainable and would not be a drag on the economy.

Now that the election's over, the deficit needs to be addressed.


He might as well put on a dress, slap on some lipstick and go hang out on a street corner.

[ftlaudguy]

17. Greenspan has definitely been "politicized"

under this administration and as such, should no longer be lended any attention or credibility. Listen to Rubin, who's been screaming about these deficits for years and warning of the disasterous consequences.

[AlCzervik]

9. No shit Al, thanks for the really late info

that we know already. How long have we all been yelling about this? How long has this been going on?

[yellowcanine]

10. Nice timing Alan.

[reprobate]

11. What an opportunity. Soylent Green,inc will issue an IPO shortly.

An opportunity of a lifetime (end of) for repug entrepreneurs to make a literal killing. There are opportunities in the supply, production, and distribution areas for start ups to supply the food energy we all will need.

Get in on the ground floor while it's cheap.

[Barkley]

12. Al is talking to foreign holders of U.S. debt

In August, the most recent period for which there's data, foreign private investors sold $2 billion more in U.S. stocks than they bought, the Treasury said. Meanwhile, they dumped $4 billion more in government bonds than they purchased.

Al's re-assuring them that Fed won't 'accommodate' any further fiscal
expansions (e.g. tax breaks/spending) that would take deficits higher than 6% of GDP.

That is likely to be difficult given the current circumstances.

We're in an era of fiat money so if the dollar keeps falling, investments dominated in euros will keep looking better and better.


Congress also voted to raise the debt limit bill would pump up the federal borrowing cap to $8.18 trillion. That is 70 percent the size of the entire U.S. economy, and more than $2.4 trillion higher than the debt Bush inherited upon taking office in 2001.

[cliss]

13. Take everything Alan Greenslime says

with a grain of salt. The Secretary of the Fed has always been an independent agency, separate from the claws of the government. (for obvious reasons).

Not so any more. Alan Pondscum has vowed his loyalty to Bush and his cronies. He's shown more than once that he dances to their fiddle.

Greenswine forgets one thing: as the dollar tanks, foreigners don't want to hold onto american investments. Their exports become overpriced. Their businesses start to have financial problems.

Even if they want to, they may not be able to be our ever-loving enablers. If I could figure it out, surely you can too Alan?

[leesa]

14. Wasn't that the Bush plan?

Does this guy even have a degree in economics?? He seems such a simpleton.

[Chico Man]

15. The fate of the US economy is completely in the hands of foreigners

Sounds like quite the trump card!

[schultzee]

16. Like now he pretends to care! That SOB knew all along what

chimpereconomics was going to do. Frontline, "Is Wal-Mart good for America," gets into the specifics about the overwhelming trade deficit with China. Chimpeconomics goal is destruction of economy then democracy.

[Shootz]

18. A weaker dollar

A weaker dollar is actually good for us in one way it makes us more competitive in foreign markets. But is bad for our out of control government spending, yet the solution is very simple. A balanced budget, maybe that’s to simple a concept for some to grasp.
A major mistake of the Bush administration was to cut taxes and give tax breaks (some large businesses went tax free )while giving every one a refund. That made him a lot of friends but was not good for the nation, it drove us deeper into debt. That and his war. It's time for us to bite the bullet and do the right thing no matter how much our constituents complain.

[Spazito]

22. Given that there is a world-wide boycott of US goods....

the weaker dollar will not make the products more competitive. Add to that, the US makes very few products domestically now, it is all outsourced. The bush admin will cut social programs while they increase the debt as they know nothing else.

[otohara]

19. High Debt? No Problem! - Fed Chief - 10/19/2004

http://www.cbsnews.com/stories/2004/10/15/national/main649622.shtml

Ok, so the government spending is a problem, but people spending more than they have isn't?

(AP) The record level of debt being carried by American households and soaring home prices do not appear to represent serious threats to the U.S. economy, Federal Reserve Chairman Alan Greenspan said Tuesday.

Greenspan said that high levels of personal bankruptcies were a concern because they indicated "pockets of distress" among American households. But he said the vast majority of U.S. consumers "appear able to calibrate their borrowing and spending to minimize financial difficulties."

In a speech before America's Community Bankers, the organization that represents smaller banks in the country, Greenspan sought to play down worries about the high debt levels being carried by American households as a percentage of their after-tax incomes and the steep increases in home prices in recent years.

Some economists have expressed concerns that the big rise in home prices could represent a bubble that may deflate just as the stock market bubble did starting in the spring of 2000.

[stevenswld]

20. Bush is a Traitor to the US citizenry

We are in very deep trouble as a nation. We now have a ruler who sees himself as World Emperor and cares nothing for the American citizen. He is planning the demise of every American worker and moving to send your jobs to any country that will take them as repayment to CEO's and foreign campaign contributors. Since this is not happening fast enough, he is increasing the number of immigrants to do the same from within our borders. Manufacturing CEO's have decided the money is not in making a product but peddling foreign made goods. This thinking will destroy our ability to provide for our own needs especially in time of war and empower our foreign enemies with military wealth. As we lose jobs, we lose our tax base and increase our foreign debt. Eventually, we will see a sell off of stocks by China that will create a market crash. Once our technology has been moved off shore, we will have no further control of the supply. Soon, the off shore manufacturers will wake up and ask themselves "Why are we making this stuff and allowing these American companies to skim off large profits?". They will bypass the U.S. corporations and sell direct. Then, even the CEO's will be on the streets as well. We must stop the insanity by demanding a zero trade deficit. Our dollar will continue to slide until we can't even afford Chinese goods and your home values will deflate along with everything else you own due to this slide.
But, Bush isn't worried. He is putting millions in his pockets as oil prices move upward. Time is short.

[Shootz]

21. Is a USA Economic Collapse Due in 2005?

The US Senate just reconfirmed 78-year-old Alan Greenspan to an unprecedented fifth term as chairman of the world's most powerful central bank, the Federal Reserve, or Fed as it is known. The fact that President Bush re-nominated Greenspan underscores how vulnerable the global financial edifice is, and not how excellent a central banker Greenspan is.

http://www.globalresearch.ca/articles/ENG407A.html

[napi21]

23. So where was this comment BEFORE the election?

I know I heard him say a temporary high debt wasn't a problem, now when he's got another four years to play king of the finance world, he's openly recognizing the problem?

I remember how upset I was with Alan during the Clinton years, when the only thing he knew was Raise the interest rate again! The only right light I can find is that he's a very old man!