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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Knighty Tin who wrote (13035)	10/7/2004 11:40:47 AM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Warning - Asteroid Alert Mish ==================================================== Current-account gap no ´asteroid,´ official says Thursday, October 7, 2004 3:23:18 PM afxpress.com Current-account gap no 'asteroid,' official says WASHINGTON (AFX) -- The large and growing U.S. current-account deficit isn't an "asteroid heading for the planet," said Assistant Treasury Secretary Randal Quarles on Thursday. "The U.S. current-account deficit is not a risk," Quarles told the National Association of Manufacturers. He noted that Australia has run a comparably sized current-account deficit for 20 years with no apparent harm "There is no particular reason to think that a current account deficit of this size is an asteroid heading for the planet," he said. The deficit is as much Europe's problem for growing too slowly to absorb U.S. exports as it is the U.S.'s problem for buying too many Asian goods, he suggested The value of China's currency is also a major factor in the current-account deficit, the manufacturers association has said. Inexpensive Chinese goods have crowded out U.S. producers in markets throughout the world, the trade group argues Quarles said the U.S. is putting pressure on China to move faster toward a more flexible exchange rate for the yuan, but rejected an unfair trade complaint recently filed by labor groups as an unproductive distraction. "They can and ought to move faster," Quarles said Quarles also expressed no concern about the possibility that foreign central banks would decide they no longer want to finance the U.S. current-account deficit It wouldn't be in the interest of foreign central banks and others to dump their Treasury holdings suddenly, he said Even if foreigners' appetite for U.S. bonds were satiated, he said, "someone else would step up to buy at roughly the same price." China's economy appears to be heading for the hoped-for soft landing, he said He also told the manufacturing group that high oil prices haven't yet harmed the global economic recovery, and he expects prices to decline over time So far, record high nominal prices haven't been transmitted into wages or general price increases, he said.