Thread: US consumer cannot sustain global economy: IMF head

[My comment: interesting that this is showing up in the Indian press. So much of the rest of the world was counting on us Americans to just magically keep on buying, buying, and buying. At the same time, these same folks were insulting us, claiming we got paid too much, borrowed too much, and wanted too much. Be careful what you wish for is a saying the third world needs to hear now, I guess]

US consumer cannot sustain global economy: IMF head

11 Sep 2009, 2209 hrs IST, AGENCIES

PARIS: The savings-conscious US consumer can no longer be counted on to drive the global economy and new sources of momentum will have to be found,
the head of the International Monetary Fund has urged.

IMF Managing Director Dominique Strauss-Khan, in an interview with the newspaper Le Monde to be published Saturday, also urged Group of 20 leaders convening in Pittsburgh, Pennsylvania on September 24 and 25 to approve measures to tighten financial system regulation.

He added that the G20 was not acting "quickly enough" on the question of exorbitant bonuses taken by executives at major banks.

"The economy is recovering, great. But we have to remain cautious ... and not give the impression that the crisis is behind us," he told the paper.

"We have emerged from the financial crisis" but continue to grapple with "economic" and "social" crises.

"For the worker who will lose his job in November the crisis is not behind him -- the crisis is ahead of him," Strauss-Khan said, warning that an increase in unemployment will not be checked before the second half of 2010.

He argued that global economic growth can no longer be expected to come from such macro-economic imbalances as US indebtedness.

In the United States, hard-hit by recession, "the household savings rate, which was practically zero, is now at 5.0 percent ... Good news for the deficits. But who will replace the US consumer to power global growth?"

He recalled that the United States accounts for 25 percent of global output.

"The question of new sources of growth must be considered," Strauss-Khan said, voicing doubts that emerging market countries will be able to provide the driving force behind worldwide momentum.

He also urged the United States to maintain its economic support measures.

"With private demand still extremely weak, we could see another slide" in the world economy, he warned.

http://economictimes.indiatimes.com/art ... 000532.cms

We need to build up our own country and let the third worlds take care of themselves. If we all drown no-one benefits.

I completely agree. the admonition not to kill the goose that laid the golden eggs is another saying they apparently didn't have in the third world as they grabbed for as many of our jobs (via visas and offshoring) as they could, competing with our workers directly on the price of labor. They would crow at every job gained, insulting us for what they thought were bloated American salaries, never thinking what we were paying for with those salaries: much higher bills than they pay and a social infrastructure they'd die to come live in. They just never put two and two together.

The title should have been, The U.S. Consumer Cannot Sustain the Global Banking Cartel and the Towing Corptocracy.

Alot of economist ignore the fact that the bulk of US wealth came from our industry. When our industry got exported our wealth went with it. Its ludicous
to expect a US economic rebound without major industries returning to the US.

It was in February 2009 that Obama lead the G 20 in giving the IMF and other international agencies $1 trillion and 100 billion. The U S part of that is just over 200 billion. Where did that money come from? A lot of it, about 1/3 was borrowed from China and Japan. The rest came from either U S governments, businesses and individuals buying Federal government paper. So about 65 billion was just debt. Probably a lot of it will never be paid back by the third world governments that got it. It will be forgiven. And they ask why is the U S economy in such bad shape? What are they going to do when the U S can't borrow any more money because the interest rates are too high? The only option seems to be printing up the money. That's when the hyperinflation will start.

Originally Posted by Justthatguy

It was in February 2009 that Obama lead the G 20 in giving the IMF and other international agencies $1 trillion and 100 billion. The U S part of that is just over 200 billion. Where did that money come from? A lot of it, about 1/3 was borrowed from China and Japan. The rest came from either U S governments, businesses and individuals buying Federal government paper. So about 65 billion was just debt. Probably a lot of it will never be paid back by the third world governments that got it. It will be forgiven. And they ask why is the U S economy in such bad shape? What are they going to do when the U S can't borrow any more money because the interest rates are too high? The only option seems to be printing up the money. That's when the hyperinflation will start.

Sometime in the future the US will have no choice but to default on the Debt to China and other countries, this cant go on for long.