Global economic crisis looms - thanks to Bush

[Tingkai]

The International Monetary Fund says that excessive spending by the Bush administration threatens to create a global economic crisis.

WASHINGTON – With its rising budget deficit and ballooning trade imbalance, the United States is running up a foreign debt of such record-breaking proportions that it threatens the financial stability of the global economy, according to report released yesterday by the International Monetary Fund.

Prepared by a team of IMF economists, the report sounded a loud alarm about the shaky fiscal foundation of the United States, questioning the wisdom of the Bush administration's tax cuts and warning that large budget deficits pose "significant risks" for the United States and the rest of the world.

The report warns that the United States' net financial obligations to the rest of the world could be equal to 40 percent of its total economy within a few years – "an unprecedented level of external debt for a large industrial country," according to the IMF, that could play havoc with the value of the dollar and international exchange rates.

The dangers, according to the report, are that the United States'

http://www.signonsandiego.com/news/b...99_1b8imf.html


Will Americans get rid of Bush before storm hits?

[Shi Huangdi]

Why didn't you post the rest of the article, including the part showing the Bush administration's reactions to the IMF document? Didn't want people to get both sides of the story?

[Jaguar]

I denounce this thread on the grounds that it is racist.

[Harry Tuttle]

Uh yeah, the IMF got a deal on paper down at Office Barn. And no, the U.S. really doesn't give a damn what the IMF thinks.

[Tingkai]

Originally posted by Shi Huangdi
Why didn't you post the rest of the article, including the part showing the Bush administration's reactions to the IMF document? Didn't want people to get both sides of the story?

Yeah, that's why I didn't provide a link.

The Bushie boys claim they're trying to cut the deficit in half. Have you seen any signs of this happening? Nope.

Quite the opposite. Bush is getting ready to promise more money for space exploration.

Republicans like to claim that deficit spending is great for the US, but clearly, the Bush's habit of giving taxpayers money to his buddies is setting the stage for a global economic meltdown.

[KrazyHorse]

I want to see what happens when the US hits yearly budget deficits of 1 trillion.

Sooner, rather than later at this pace.

[Agathon]

Originally posted by Harry Tuttle
Uh yeah, the IMF got a deal on paper down at Office Barn. And no, the U.S. really doesn't give a damn what the IMF thinks.

They'd better. If the rest of the world decides that the US dollar is no longer a suitable reserve currency then you are screwed big time.

[Ted Striker]

today i tripped and fell

i blame george bush

[Agathon]

Originally posted by Ted Striker
today i tripped and fell

i blame george bush

For being unco?

[PLATO]

the shaky fiscal foundation of the United States

uh...sure. The poor, poor US economic foundation. Perhaps France will bail us out?

[Agathon]

Originally posted by PLATO


uh...sure. The poor, poor US economic foundation. Perhaps France will bail us out?

They won't bail you out, they'll just start using the Euro as a reserve. In fact that is looking a better idea every day.

That would mean among other things, less financial independence and higher inflation for the US.

[C0ckney]

yeah, cos the euro isn't a bad joke *cough* stability pact *cough*

[el freako]

Originally posted by PLATO

uh...sure. The poor, poor US economic foundation. Perhaps France will bail us out?

Actually the US is already being bailed out - by the central banks of Japan and China, which are selling their currencies to support the dollar, if (when?) they stop the dollar will crash pushing up inflation and interest rates.

Whilst the US corporate sector has repaired it's balance sheet those of households have stayed just as bad as they were during the peak of the boom - and the US government's underlying financial position has deteriorated by nearly $800bn a year!

If you look at the combined financial balance of Government and Households which has to be financed by either borrowing from abroad, selling US assets to foreigners or US corporations making profits but not reinvesting them for future growth.
This combined balance was +2% of GDP during the 1960's, it wobbled in the range of 0% to +4% during the 1970's.
After Reagan was elected it went to -2% and stayed there untill the late 1990's when it moved back into balance.
Since then it has deteriorated rapidly and it now stands at -7% and shows no sign of even slowing it's deterioration!


To bring some balance into the system the US will have to either:
a) Slash it's military and give up the mantle of superpowerdom.
b) Abolish a major social spending program (like pensions, healthcare or education).
c) Bring it's levels of taxation up to european levels.

[The diplomat]

Originally posted by el freako
To bring some balance into the system the US will have to either:
a) Slash it's military and give up the mantle of superpowerdom.
b) Abolish a major social spending program (like pensions, healthcare or education).
c) Bring it's levels of taxation up to european levels.

Well, none of these options are acceptable. a) would cripple our national defense, b) would hurt the lower class, and c) would devastate our economy causing huge unemployment.

[Stuie]

The weak dollar is already causing rises in oil prices. Oil is traded internationally in US dollars; since the dollar is weak, OPEC is allowing oil prices to rise in order to maintain their buying power with the deflated dollar.

Meanwhile, Japan is trying to keep the Yen from gaining too much value, as this hurts Japanese exports. Once again, with the weakened dollar the money they have spent to keep their economy on track has been for naught.

GW's tax cut was reckless and irresponsible. You can have it back now, I don't want it if it's going to **** up the entire world economy.

[el freako]

Originally posted by The diplomat


Well, none of these options are acceptable.

Then you will have a crisis of Mexican/Argentinian/Thai proportions.


One question, why would c) cause massive unemployment?

Some of the highest-taxed economies in the EU have unemployment rates well below the US level.

[el freako]

Originally posted by Stuie
The weak dollar is already causing rises in oil prices. Oil is traded internationally in US dollars; since the dollar is weak, OPEC is allowing oil prices to rise in order to maintain their buying power with the deflated dollar.

Quite true, whilst the price of Oil has stayed at around $28 since 2000, it has fallen from €31 to €21.

[dannubis]

Yes, let's most of all not listen to the financial experts of the IMF.

When are some of you right wing minded guys going to stop with putting your heads in the sand each time an international organisation says or does something that does not correspond to your view?

A few years ago when the Argentinian economy crashed you were the first guys to fully support the IMF's decision not to put money in Argentina anymore until they had cleared up their economical mess. Now, the same organisation is sending a clear warning about your current situation and suddenly the IMF becomes a bunch of incompetent good for nothings which don't know what they are speaking about...

[edit spelling]

[SpencerH]

Oh good, another Bush is responsible for the martian invasion thread.

[alva]

Not if they were looking for intelligence.

[dannubis]

Or if he had bothered to actually read the thread

[Kidicious]

The IMF is almost always wrong, and in this case they certainly are. Without the weak dollar there would already be a global economic crisis. The US is doing more to stimulate the global economy than anyone else. Without stimulation you have a crisis. That's the way it works.

[The diplomat]

Originally posted by el freako

One question, why would c) cause massive unemployment?

Because higher taxes would reduce consummer spending, reduce consummer confidence, and reduce investment, causing businesses to lose lots of money. And when businesses lose money, they generally lay people off.

Some of the highest-taxed economies in the EU have unemployment rates well below the US level.

Which countries? I know France has high taxes, and it is suffering double digit unemployment.

[dannubis]

Like i said before, the way one counts the number of unemployed people is very important. The count is based on the social security database and in Europe it is a lot easier to get in one of these than in the US...

[Kidicious]

Originally posted by Agathon


They won't bail you out, they'll just start using the Euro as a reserve. In fact that is looking a better idea every day.

They have to use dollars to buy oil. That's not up to them.

[Stuie]

Our unemployment rate is totally screwed. It is based solely on those eligible to work and actively seeking work. And even if you are under-employed, you are considered "employed". So if you are not employable because you are in prison or on parole, you're not unemployed. If you are on strike or locked out, you are not unemployed. If you are working parttime but would prefer fulltime work, you are not unemployed. If you have given up looking for work, you are not unemployed.

The real figure is probably about 6% higher than what's advertised.

"There are three kinds of lies: lies, damned lies, and
statistics." - Benjamin Disraeli

[SpencerH]

Originally posted by dannubis
Or if he had bothered to actually read the thread

You talkin to me?

[el freako]

Originally posted by The diplomat
Which countries? I know France has high taxes, and it is suffering double digit unemployment.

United States:
Taxation: 31.0% of GDP
Unemployment: 6.1%
Employment: 70.7% of population aged 15-64

Sweden:
Taxation: 59.3% of GDP
Unemployment: 4.8%
Employment: 73.0% of population aged 15-64

Denmark:
Taxation: 57.4% of GDP
Unemployment: 5.5%
Employment: 76.3% of population aged 15-64

Austria:
Taxation: 50.4% of GDP
Unemployment: 4.5%
Employment: 74.0% of population aged 15-64

Netherlands:
Taxation: 46.2% of GDP
Unemployment: 3.7%
Employment: 64.6% of population aged 15-64

[The diplomat]

Originally posted by el freako


United States:
Taxation: 31.0% of GDP
Unemployment: 6.1%
Employment: 70.7% of population aged 15-64

Sweden:
Taxation: 59.3% of GDP
Unemployment: 4.8%
Employment: 73.0% of population aged 15-64

Denmark:
Taxation: 57.4% of GDP
Unemployment: 5.5%
Employment: 76.3% of population aged 15-64

Austria:
Taxation: 50.4% of GDP
Unemployment: 4.5%
Employment: 74.0% of population aged 15-64

Netherlands:
Taxation: 46.2% of GDP
Unemployment: 3.7%
Employment: 64.6% of population aged 15-64

I hate to nitpick, but US unemployment is now 5.7%.

[el freako]

Sorry, forgot to mention that that data was for the year 2003 (the whole year, as you cannot easily calculate the other data monthly)