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

To: RealMuLan who wrote (21051)	1/11/2005 2:26:22 PM
From: RealMuLan	Read Replies (2) \| Respond to of 116555

Fed's Gramlich-U.S. needs foreign help on fiscal issues Mon Jan 10, 2005 11:34 AM ET SCOTTSDALE, Ariz, Jan 10 (Reuters) - Federal Reserve Governor Edward Gramlich said on Monday the United States needs stronger foreign demand to help correct its huge fiscal imbalances without disrupting global growth. Speaking to the International Forum annual meeting on the importance of boosting anemic U.S. savings, Gramlich said reducing big U.S. budget and current account deficits that divert savings to debt repayment was important, but there would be consequences for the world economy. "If the U.S. brings its fiscal policy in order, then the U.S. is (such) a huge presence in the world economy, that's going to lower world demand.," Gramlich said. "So there will be a deficiency in world demand and the foreigners have an obligation here as well -- the U.S. cannot fix this problem by itself." He said U.S. trading partners need to do more to spur their own demand to take up the slack in the global economy if the United States shifts policy to encourage less consumption and more savings, as many foreign governments say is necessary. Gramlich suggested that would break the current cycle in which the United States and some key Asian governments, notably China and Japan, have become dependent upon one another with the Asian governments buying huge volumes if U.S. debt that enables Americans to keep consuming and saving little or nothing. reuters.com