World Bank: U.S. deficits may hurt others

Continued high U.S. budget and trade deficits could sharply cut economic growth in developing countries by driving up interest rates and weakening the dollar, the World Bank said Wednesday.

Even without the impact of U.S. deficits, average economic growth in China, Russia, India and other developing economies is expected to decline from a three-decade high of 6.6 percent in 2004 to 5.2 percent next year, the bank said in a report on the global economic outlook.

But it said that fall could be sharper if financial markets respond to continued heavy U.S. borrowing by pushing up interest rates.

If rates rise, "and we think that that's what ultimately will happen if there's no (U.S.) policy adjustment, then all developing countries will suffer," said Hans Timmer, a bank economist, at a news conference.

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...Wolfowits? I know Hans Timmer said it, but Wolfie had to say it was okay to say it.

They're getting it out while they still can.

If Dems win, they want their borrowing to bite Dems. If they win, they can undo their own rules.

Here in Michigan, outgoing CON gov gave tax breaks, er, ah, gave tax breaks that would start after he left office. Now a Dem gov has to make the tough cuts, and that is what people will remember. R's gave tax cute and D's cut good programs.

Don't be surprised to see a debt limitation bill that will take effect in '09.