Fed's Yellen says U.S. economic downturn possible

[UpInArms]

Source: Reuters

WASHINGTON (Reuters) - There is the potential for a downturn in the U.S. economy that could have ripple effects around the world, San Francisco Federal Reserve President Janet Yellen said on Saturday.

The U.S. economy grew modestly in the first quarter but should accelerate in the second half of the year, she said in a speech to the American Academy of Arts and Sciences and the American Philosophical Society.

Enumerating the top current risks to stable economic conditions around the world, she said that in the U.S. economy "there is potential for a downturn that could have major spillover effects around the globe." The United States contributes roughly 25 percent to world economic output, she noted.

<snip>

Yellen said other risks to the global economy include large investment and savings imbalances and possible disruptions from the re-pricing of risks in international financial markets.

Read more: http://www.reuters.com/articlePrint?articleId=USN2834623520070428

[UpInArms]

1. Dollar decline tracks U.S. fall from grace

this is from Friday night new's dump:

http://www.reuters.com/articlePrint?articleId=USN2632993720070427

NEW YORK (Reuters) - The United States may have no military equals, but the challenges to its financial power have become impossible to ignore.

A stark reminder came on Friday when the weakening dollar slumped to a record low against its main rival, the euro, after the U.S. economy recorded its fourth consecutive quarter of below-trend growth.

The strength of the dollar is more than just a matter of bragging rights. Experts say the consequences of its long-term decline could have deep significance -- for average Americans and for the country's position as an unrivaled global power.

<snip>

The dollar is perhaps the biggest problem. As a net debtor, the United States must attract some $3 billion every working day to finance a gaping current account deficit that in 2006 amounted to 6.5 percent of gross domestic product.

...more...

[bluerum]

2. That's a big "duh". Anyone remember the savings and loan debacle under

the reign of bush 1? Dragged the economy into the dirt. The government (tax payers) bailed out hundreds of failed savings and loan banks who made stupid loans to third world countries and companies. These loans looked great on paper (ala Enron accounting practices) but then they all defaulted.

The banks had nothing to lose - they were insured by the US taxpayers courtesy of the reign of bush 1.

Well - the second installment is being served up now - enter the sub-prime mortgage debacle courtesy of the reign of bush 2.

[Donkeykick]

3. Don't Worry.

The Bush Administration will just refinance the debt to pretty the whole situation again.(Got a cut? Put a band-aid on it!)

:eyes:

[Demeter]

4. Three Whacks With the Clue Stick for Yellen

Janet, dear, we've been in recession since Bush took office. In fact, Greenspan started one up to try to goose the election for Bush, and it rapidly went out of control with 9/11 and the mishandling, the war and mishandling, the corporate fraud and the tax cuts for the rich. Is a wonder we have anything left of our economy today, and it's damn little, and Bush is trying to destroy that last vestige of the great American economic engine as we speak.

Possible, my foot! Ongoing.

[TexasLawyer]

5. Jenga

The U.S. economy seems like a game of Jenga these days. They keep pulling pieces of wood out of the stack. Rampant outsourcing, war debt, etc... each one further destabilizes the pile.

One of these days, the structure will no longer stand up.

[LeFleur1]

6. Economy

I'm sure the economy will hit bottom after 2008. Then these bozos will blame someone else for their incompetence.