corrente

How to drown the world in a bathtub of multi-national voodoo economics.

Following Lambert's recent post below, see: And who owns our government plastic? Asia ....

Maybe there should be some kind of global color coded warning system for this stuff:

The International Monetary Fund published a report warning that the United States' budget and trade deficits threaten to destabilize the entire global economy; Bush Administration officials dismissed the report and said that lots of countries run huge budget deficits. [Harpers]

Elizabeth Becker and Edmund L Andrews [NYTimes] write:

In a paper presented last weekend, Robert E. Rubin, the former secretary of the Treasury, said that the federal budget was "on an unsustainable path" and that the "scale of the nation's projected budgetary imbalance is now so large that the risk of severe adverse consequences must be taken very seriously, although it is impossible to predict when such consequences may occur."

Other economists said they were afraid that this was a replay of the 1980's when the United States went from the world's largest creditor nation to its biggest debtor nation following tax cuts and a large military build-up under President Ronald Reagan.

Full article via Common Dreams: I.M.F. Says Rise in U.S. Debts Is Threat to World's Economy, by Elizabeth Becker and Edmund L Andrews [New York Times]

From Why the WTO Is Going Nowhere, by William Greider - September 4, 2003.

"the flashpoint that sends a wake-up call to world financial markets."

Cassandras (like myself) have argued for some years that America's negative balance sheet--buying more than it produces and borrowing to do so--will eventually force an ugly reckoning. With its ever-swelling trade deficits, the moment of painful adjustment draws closer, but the debt cycle is unlikely to stop until creditor nations conclude that the US debt position is too dangerous and start withholding their capital. Alternately, if China's overheated economy gets mired in financial disorder or inflationary pressures, it might need to bring its capital home--thus pulling the plug on American consumers and the "buyer of last resort" for the global system at large.

Nobody knows when or how this may occur. Morgan Stanley economist Stephen Roach foresees the moment approaching when US gross national savings turns negative, and that could be "the flashpoint that sends a wake-up call to world financial markets." The dollar falls sharply, the US economy sinks into a deep, unambiguous recession and so does the world. [page LINK] [The Nation]

[...]

Above all, the governing elites have to abandon the fiction that what's good for US multinationals is good for the US economy. It ain't necessarily so.

American politics is not ready to face the bad news--neither probably are the American people. And the Bush presidency, founded on false triumphalism, is certainly not going to disturb the myth of America as the supreme economic powerhouse. Perhaps the best we can hope for right now is that a few brave voices, maybe among the Democratic candidates, will begin the hard task of truth-telling. Globalization is papered over with so many fallacies that any politician who describes reality risks ridicule. Nevertheless, the country badly needs to hear the truth. Win or lose, a politician who finds the courage to shatter failed myths is admired in the long run, remembered as a true statesman. [page LINK] [The Nation]

Bush Administration officials dismissed the report...