US federal budget on unsustainable path!
Friday, 11 June 2010
From Fazle Rashid
NEW YORK, June 10: US Federal Reserve Chairman Ben Bernanke appearing before the House Budget Committee answered probing questions for more than two hours yesterday warning that the federal budget appears to be on an unsustainable path but did not mince words in admitting that exceptional increase in deficit was required to soothe the pain of recession.
He neither supported spending cuts nor tax increases. With inflation well below 2.0 per cent, attention has turned to the other side of the central bank's mandate, maximising employment. At the same time debt crisis roiling Europe has made deficit cutting a potent topic, the New York Times in a report said today. Bernanke's predecessor Paul Volcker now an economic adviser to President Obama struck an optimistic tone stating " sweeping financial reforms legislation now before Congress would make the United States a model for the world". The United States will go from laggard to the head of the parade if we get this legislation passed, Volcker was quoted as saying to financial market regulators. Volcker expects the new law to be passed within the coming two weeks and added:" I am really hopeful for the first time that there is a chance of getting international acceptance for the basic principles."
The European Commission yesterday rebuffed claims from Germany and France that it was moving too slowly to regulate risky financial practices and said a consensus is needed among all the 27 nation bloc before a decision could be made. French president Sarkozy and German Chancellor Angela Merkel in a joint letter to European Commission President Jose Barroso underscored the importance of financial regulations. The two also called for ban on speculative trading.
The German government yesterday rejected a request for 1.1 billion euros in aid for the struggling auto makers Opel/Vauxhall. The refusal is attributed to the austerity measures adopted by Berlin. If the eurozone is to escape its sovereign debt crisis south European countries should take lesson from Sweeden's example of spending cuts and structural reforms.
Most of the nations worldwide including Pakistan and India have resorted to spending cuts to bring the level of deficit within permissible limits. The World Bank in its twice yearly forecast has suggested that the affluent nations can help the developing economies by rapidly cutting government spending or raising taxes.
NEW YORK, June 10: US Federal Reserve Chairman Ben Bernanke appearing before the House Budget Committee answered probing questions for more than two hours yesterday warning that the federal budget appears to be on an unsustainable path but did not mince words in admitting that exceptional increase in deficit was required to soothe the pain of recession.
He neither supported spending cuts nor tax increases. With inflation well below 2.0 per cent, attention has turned to the other side of the central bank's mandate, maximising employment. At the same time debt crisis roiling Europe has made deficit cutting a potent topic, the New York Times in a report said today. Bernanke's predecessor Paul Volcker now an economic adviser to President Obama struck an optimistic tone stating " sweeping financial reforms legislation now before Congress would make the United States a model for the world". The United States will go from laggard to the head of the parade if we get this legislation passed, Volcker was quoted as saying to financial market regulators. Volcker expects the new law to be passed within the coming two weeks and added:" I am really hopeful for the first time that there is a chance of getting international acceptance for the basic principles."
The European Commission yesterday rebuffed claims from Germany and France that it was moving too slowly to regulate risky financial practices and said a consensus is needed among all the 27 nation bloc before a decision could be made. French president Sarkozy and German Chancellor Angela Merkel in a joint letter to European Commission President Jose Barroso underscored the importance of financial regulations. The two also called for ban on speculative trading.
The German government yesterday rejected a request for 1.1 billion euros in aid for the struggling auto makers Opel/Vauxhall. The refusal is attributed to the austerity measures adopted by Berlin. If the eurozone is to escape its sovereign debt crisis south European countries should take lesson from Sweeden's example of spending cuts and structural reforms.
Most of the nations worldwide including Pakistan and India have resorted to spending cuts to bring the level of deficit within permissible limits. The World Bank in its twice yearly forecast has suggested that the affluent nations can help the developing economies by rapidly cutting government spending or raising taxes.