The IMF on Poor US Economic Policy

Don’t you love it when scoundrels fall out. The IMF, which expects poor countries to follow his orders when their economies seem to be out of balance, is now scolding the US for its $800 billion balance of payments deficit.

The New York Times has a brief article on the subject.

Weisman, Steven R. 2006. “U.S. Trade Deficit Is Called a Threat to Global Growth.” New York Times (6 September)

<http://www.washingtonpost.com/wp-dyn/content/article/2006/09/06/AR2006090601183.html?sub=AR”&gt;http://www.washingtonpost.com/wp-dyn/content/article/2006/09/06/AR2006090601183.html?sub=AR&gt;

“In a speech and in a session with reporters, the managing director of the International Monetary Fund, Rodrigo de Rato, … cited “the risk of a disorderly adjustment of global economic imbalances” as one challenge that policy makers must address to sustain growth. “There are more clouds on the horizon than there were a year ago,” Mr. de Rato said in a speech at the Brookings Institution.

“Mr. de Rato’s warning about imbalances, one of many from financial experts in recent months, is to be taken up at the annual meeting of the directors of the I.M.F. and the World Bank this month in Singapore. The Bush administration has said that while it is concerned about trade and current-account balances, there is no cause for alarm because countries will continue to lend the United States money to finance its deficits.”

“But many economists warn that the United States cannot sustain its current $800 billion annual trade deficit, which has led to trillions of dollars in dollar-denominated reserves being held by China and other Asian countries, and by Saudi Arabia and the other major oil producers. Mr. de Rato, while carefully avoiding any criticism of American policies, appeared to put himself in the column of the worriers.”

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