Global fears as US goes into the red

[rooboy]

The huge black hole in the US budget and the country's ballooning trade deficit are threatening to push up interest rates across the globe and destabilise the international economy, one of the world's most powerful financial institutions has warned.

The budget deficit - which has swung from a healthy surplus in 2000 to a forecast blowout of more than $US400 billion ($521.2 billion) this year - was a "significant risk" for the rest of the world, the International Monetary Fund said yesterday.

"Sustained fiscal deficits lower national savings in the United States and will eventually raise real interest rates both in the United States and abroad," said Charles Collyns, deputy director of its western hemisphere department.

Economists said the warning was important for Australia, as local market interest rates are closely linked to those in the US.

The fund's warning also echoes concerns raised by the Australian Treasury in its most recent economic assessment last month when it said the US's "twin deficits" - its budget and current account blowouts - were a risk to global economic stability, and therefore posed a threat to the Australia's economic outlook.

http://www.smh.com.au/articles/2004/01/08/1073437412930.html

[leftchick]

1. whew, for a second there I thought it was a "Red Alert" terra warning...

That will be next to distract from our broken economy....

[DoYouEverWonder]

2. We will be on red alert

when the US goes into the red. All the shit's going to hit the fan at the same time.

[Mountainman]

3. Shhhhhhh! Let's don't tell the voters we don't want to scare them!

I don't think we will here this on Rush or Hanity today will we? We don't want to hurt the myth that Bush is bringing us a boom type economy!

[cliss]

4. And while Rome burns,

they fiddle. Does anyone else besides me sense that THEY DON'T CARE?

John "Snowjob" Snow, the new secretary of the Treasury, said recently that they will "support a strong dollar", but they will do nothing to support it. As of right now, Japan is supporting the dollar with Yen, but they cannot hold out indefinitely. Especially if the dollar continues its slide.

It appears that the rest of the world, in particular the currency speculators are saying "We have no faith in you, U.S."

[54anickel]

6. Looks like they are buying as I type and bought 28.25 billion Mon & Tues

http://www.reuters.com/financeArticle.jhtml?storyID=4098566&newsType=usDollarRpt&menuType=currencies

Yen was up to 108, but they just slapped it back down to 106. Unfortunately it's already popping back to 107. Very interesting to watch at this time of night. I'm usually not up this late.

http://quotes.ino.com/exchanges/?e=FOREX

on edit add (finish my thought)
I don't know how long that extra money they approved for intervention is going to last if they have to dump 28 billion at a crack.

[IndianaGreen]

5. The health of capitalism is of no concern to me

The sooner it dies, the better off the world would be.

[CHIMO]

7. Don't

Think that is bothering China.

Seems like they just have to sit back and watch.