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Politics : PRESIDENT GEORGE W. BUSH
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To: Hope Praytochange who wrote (663045)11/30/2004 8:35:05 AM
From: DuckTapeSunroof  Read Replies (4) of 769670
 
the US Congress and the
just re-elected President have joined to spend trillions more dollars
than the government takes in. That creates the record annual deficit
and national debt. And more than one half of that debt is financed by
foreign investors, especially Central Banks who, until now, have been
buying Treasury bonds.

Foreign investors hold an amazing $7.3 trillion of US debts. The US
holds $5.3 trillion of foreign assets, leaving a cumulative "balance
of trade" deficit of over US$2 trillion. That's about US$6700 for
every American. And as the dollar sinks, there's a move to the euro.
Why? Because now €1 = US$1.33.

Smart currency watchers worry that Washington will be tempted to
solve its future debt problems the way governments have too many
time in the past - by printing more money. The resulting inflation
would be disastrous for the US economy.

The value of the dollar no longer relies on gold backing, but its
relative value does depend on world confidence in the greenback.
It will help if the so-called conservatives in Congress stopped
spending like there's no tomorrow, cut the government debt and
realized the extreme gravity of the situation.

Stephen Roach, chief economist at investment banking giant Morgan
Stanley, has a public reputation for being bearish. But in private he
recently predicted America has no better than a 10% chance of
avoiding 'economic Armageddon.'
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