Greenspan to French finmin:US lost deficit control

Discussion in 'Economics' started by K.C., Sep 26, 2005.

  1. K.C.


    By Paul Carrel

    WASHINGTON, Sept 24 (Reuters) - U.S. Federal Reserve Chairman Alan Greenspan told France's Finance Minister Thierry Breton the United States has "lost control" of its budget deficit, the French minister said on Saturday.

    "'We have lost control,' that was his expression," Breton told reporters after a bilateral meeting with Greenspan.

    "The United States has lost control of their budget at a time when racking up deficits has been authorized without any control (from Congress)," Breton said.

    "We were both disappointed that the management of debt is not a political priority today," he added.

    Ministers from the Group of Seven rich nations on Friday called for vigorous action around the world to curb rising imbalances in international trade and investment accounts.

    A decrease in the U.S. budget deficit were cited by the G7 as one way to ease those imbalances. U.S. Treasury Secretary John Snow said the U.S. administration was still committed to halving its budget deficit by 2009.

    Breton spoke as International Monetary Fund Managing Director Rodrigo Rato said U.S. plans to cut its government expenditures now looked ambitious in the light of huge reconstruction costs to be borne in the wake of Hurricane Katrina.

    Breton said: "The situation that is creating tension today on the currency market ... is clearly the American deficit."

    The United States needed to address its budget deficit, he said, adding: "It seems to me that my counterpart John Snow is completely aware of this, he wants to harness the problem, but it seems to me he doesn't have the room for maneuver."

    Breton added that after hearing Greenspan talk about inflation: "One has the feeling -- though he didn't say so -- that interest rates will probably continue to rise slightly until his departure."
  2. cable


    At least Greenspan's telling it straight to someone.
  3. TGregg


    Somebody misspelled "having". ;)
  4. cable


    LOL!! Very funny! :D
  5. typical limp wristed franco-blather. really sticking his neck out on that one.
  6. Pabst


    Of course the irony is that France has a higher national debt as a % of GDP than the U.S.

    In fact it's hilarious to hear all the morons on ET lament America's fiscal condition, when compared to Germany, Japan, Italy and France we have Calvin Coolidge frugality in government.
  7. kowboy


    So everyone who espouses a lower deficit, and forbid, a balanced budget is a moron as you say?

    Seems like calling the kettle black.

    Anyone with any wealth at all realizes that the deficit only leads to further inflation and the erosion of wealth. A nobrainer, so who is the moron?
  8. Pabst


    Don't misunderstand me. I'm not an advocate of large continuous deficits. However after the 2000-2002 equity meltdown and the uncertainty of post 9/11 I do think fiscal and monetary stimulus was imperative.

    What I AM saying is: On a comparative basis the deficits in the U.S. are quite tame from what we're seeing globally. Thus those who sell $/yen or $/euro because of debt are morons.
  9. How recent is your info?

    US is slightly over 70% debt of GDP, Germany & France are in the 60-65% mark. Eurozone overall is at 70% but that's due to counties like Greece & Italy who are heavy in the hole, over 100% debt to GDP.

    Key difference is that Europe is not growing and hence is not funding their growth by exponential debt like USA is. Plus, the currency markets seem to hold the Euro as the stronger fiat money. But all the debt figures for developed nations are in the same ballpark, it may be the new standard. It may also be the perfect formula for a worldwide financial crisis.
  10. sure, probably his idea of an insult, telling greenie's secrets like that. we all know the fed would never, ever orchestrate a leak or float ideas using media shills. lol.
    #10     Sep 26, 2005