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.
I know the Greenspan is not the most popular Central Banker especially among Democrats. I have to admit he has dropped a few notches on my ratings as well. I would add, however, he remains a very bright economist who has had more than a few important insights about the US economy.
I was particularly surprised this story did not get more press in the US. It is a very telling statement about the current state of the US Congress undere Republican leadership.
The Republicans have lost their claim to fiscal conservatism. There is no way they can argue they are fiscally conservative after the last 5 years. But, the Dems need to remind voters of the stark contrast between Bush’s and Clinton’s economic leadership. Dems balanced budgets. This is a huge issue for a lot of people out there. I don’t care if they begrudingly pull the Dem lever, just so long as they pull it.
Add this to the Statement from the GAO yesterday,
“We’re on an imprudent, unsustainable fiscal path,” Walker told a news conference. “The status quo is not an option and we’re not going to grow our way out of this problem and the sooner we get started the better.” […]
and it appears the non-elected portion of the government is downrating bonds on its own.
is that he speaks out of both sides of his mouth.
At some point with his doublespeak, he will sound like he is a responsible and diligent steward.
In reality, he is and has always been, part of the problem.
He is a hack.
He has had ample opportunity to warn about the impending disaster the tax cuts and other budget slight-of-hands the Republican Party has foisted on the country.
He chose to be a cheerleader. Now he wants to us to believe he is born-again?
ha.
ha.
ha.
eh?
I understand your dissatisfaction with Greenspan. While I agreed with his initial lowering of rates after 9/11 and to get us out of recession, he kept them too low for far too long.
However, it is important to note there is a great deal of debate among central bankers regarding whether or not they should intervene in the markets when there is an asset bubble. In essence, the community appears to be split on the issue. While it is easy to say with hindsight they should interevene, that intervention raises very difficult issues.
was the result of the tech bubble burst. Actually it began somewhere around 98 with tech spending starting to drop and was propped up by the teleco bubble spending.
When the Y2K ramp-up cooled off early in 2000, there were massive cutbacks in tech spending combined with the collapse of the telecom bubble.
Greenspan was key to pushing cheap money to float the tech bubble and then the teleco bubble. Without either of those sectors, and with the outsourcing and manufacturing losses here, the only route to cheap money to continue floating the economy was consumer spending via home equity values and cheap mortgages. Something Bubbles Greenspan promoted back in the 70s.
To keep the equity and mortgage cash cow viable meant keeping interest rates low, except that inflation (“wage” pressures) become too great to ignore at some point. At that point rates have to rise, according to current Republican thinking — from the evidence of the bankruptcy bill, in part.
So now we are on the downswing of a tech bubble followed by a teleco bubble followed by a home equity bubble. There isn’t any more cheap money to bubble away this mess.
And it is a mess that Bubbles Greenspan is complicit in and intimately a part of.
Greenspan bought, hook-line-and-stinker, the entire neocon premise of a smaller Federal government that meddles with the economy with economic jingoisms. Now he wants to distance himself?
Trickledown doesn’t work. It’s neutral. It doesn’t add or retard growth very much. What it does do in the long run is retard Federal income…
Greenspan ultimately is a fool.
Greenspan testified in front of congress that there was room for a tax cut. Which started the deficit ball rolling. After he encouraged the neocons to wreck the budget he’s overseas covering his ass. I think Alan has lost a step the last few years. Now he’s just a mumbling old man trying to start a run on our currency for no apparent reason. Fits in nice with Bush who’s actively trying to bankrupt the country. Its got to inspire confidence overseas with Greenspan mumbling that we have lost control. While Bush raids the treasury to do his dirty work.
We need to roll back the tax cuts and put the extra 250 billion a year back in the treasury. The Bush tax cuts have declared a class war on the average American. I’m calling their bluff. They can have my tax cut back. Go ahead tax my dividends. But tax the dividends of the top 1% too.
You said it: They can have my tax cut back. Go ahead tax my dividends. But tax the dividends of the top 1% too.
They can take my stinkin’ eight hundred dollar tax cut back…just so long as they take back that 100,000+ tax cut from the richest 1% while you’re at it.
The Republican’s behavior towards the deficit is exactly the type of behavior they say they’re trying to eliminate with that brutal bankruptcy bill that’s about to go into effect. If only there were some action the American people (as the creditors who are going to be out a boatload of cash) could take to strip them of everything and make them pay for their mistakes forever.
Repealing that tax cut would be a better first step towards balancing the budget than cutting military health benefits, IMO.
In the last couple of years Greenspan has made some alarming statements about bush policies… Things that in a normal America would have made “real” conservatives hair stand up on the back of their necks.
This is beyond alarming!
Not that we didn’t know it already.
The requirement for raising interest rates has intensified as a result of the deficit.
The portion of U.S. revenues committed to interest rates will start to rocket soon.
As more bonds get issued just to keep up with interest, the dollar will fall from favor as the standard unit of exchange in international transactions.
When the global acceptability of dollars no longer gives the Chinese an easy mechanism for discounting throughout the world, they will stop underpricing their currency to get paid in dollars.
When the Chinese cease to accumulate dollars, U.S. prices for common goods will spike.
Inflationary pressures will accelerate the need for interest rate increases.
The political pressure in support of inflation will be large. The financial wealth accumulated in the last few years benefits few American voters, while housing prices will inflict widespread losses that inflation could recover.
Greenspan is trying to blame his bubble on the profligate partners he financed into this mess.
is openly discussed in Asia and has been for at least a year now. It seems strange that Greeny has only just worked this out, or maybe only just admitted to it.
Greenspan is a very calculated man. The question is, what is his intent? He is a firm supply sider, at least he supports their tax cuts and privatization of social security. Remeber the classic 2001 statemant that projected budget surpluses would be too large.
My concern is that this statement will be used by the repugs to cut the budget drastically.
* Defense will not be cut
* Katrina/Rita Relief will not be cut
* Tax cut reversal is not on the table
* “Homeland Security” will not be cut.
* Transportation bills will not be cut
* Prescription Drug Benefits won’t be touched
* We will remain in Iraq / Afghanistan
So what’s left
* Social Security
* Medicaid
* Medicare
* Education
* Income Assistance
Basically service for the poor and middle class.
I believe this is part of neo-con plan to roll back the New Deal Programs. They have created the conditions and been presented with the “perfect storm” to justify their nefarious plans.
Tinfoil hat aside, there will be drastic cuts in the programs we care about while the repug corruption will be rewarded.