IMF warns US on deficit

http://news.bbc.co.uk/2/hi/business/3188495.stm

The International Monetary Fund has warned the United States that while speedy economic recovery there would benefit the whole world economy, the Bush administration should pay more attention to the instability threatened by its huge budget deficit.

In a report prepared for the World Bank and IMF annual meetings in Dubai next month, and leaked to Reuters news agency and leading newspapers, the Fund says that it has increased its forecast for economic growth in the US this year and next.

But it warns that while fiscal stimulus - President Bush's tax cuts - has helped the US and global economies to recover, the Bush administration is too optimistic about its budget deficit.

The Fund thinks it could balloon to $550bn - that would be more than 5% of economic output, significantly greater than the 3% limit that eurozone countries are required to aim for.

(snip)

anyone else here surprised?

anyone know much about foreign currency reserves other economies might rely on and the impact a strong euro would have on the dollars role in such reserves.

thanks.

If other countries stopped financing our debt, there would be immediate chaos.

What happened to Argentina can easily happen to the US.

That would seem to take of the problem in George's simple mind.

Or I wonder if he's waiting for the 1% of our richest Americans to diversify out of our economy before he starts turning on the money machines to paper over the Treasury debt?

The IMF seems taken in by the notion that tax cuts stimulate the economey. Yep, any day now, the recovery will take off.