Former Minister of Finance, United States rarely get into the newspaper reports the news, but the revelations of Paul O'Neill (Paul O'Neill) on disability throughout the presidential team and Robert Rubin (Robert Rubin) of destructive economic policies of the current administration have caused a shock in the political and financial circles of the United States .
Road to nowhere
The impetus for the revelation of former U.S. P. O'Neill and Robert Rubin has been a growing understanding of the American establishment, that the combination of incompetence and arrogance of the Bush-Cheney administration is a threat not only to the United States, but worldwide in general. However, most of them understand the political and business elite rather otrezhut a speaker, what would allow to speak about it publicly. But they will hardly deny that in their opinion is heavily influenced by the views of an economist and candidate for the nomination for president of the United States Democratic Party, Lyndon Larusha. His diagnosis of the painful condition of American society and economy, as always, is impartial and accurate. As has been said L. Larush, the current global financial system went bankrupt hopeless, overwhelmed a large number of debts and the inability to pay. The system can not be saved or «cosmetic» changes in policy, either by hyperinflation. The system went bankrupt, and find a solution to the problem will begin with the recognition of this fact. Global failure was the main theme velikosvetskogo mordoboya which broke out at the conference of the American Economic Association (AEA) in San Diego, held in early January 2004 at the Congress attended the darkness of economic notables, including Robert Rubin, the U.S. Federal Reserve chairman Sir Alan Greenspan and the Fed chief administrator Ben Bernanke.
Politically astute Robert Rubin always very cautious in their public statements, as knows how it might act on the motion of the markets. But here he shook the gathered critical ruinous fiscal policies pursued by the Bush-Cheney. Rubin said: «The scale of the expected imbalance in the national budget is now so great that the risk of irreversible effects must be treated very seriously». And further: «The consequences could be far greater and they can occur much more suddenly than analysts».
The growing deficit and the fear that the government will resort to high inflation to reduce the real value of public debt could lead to a loss of confidence in the government and significantly strengthen the national ekonomicheskie problem, he added.
All the time to think
Ominous prediction has attracted the attention of people at that and expected to Rubin. The newspaper New York Times then wrote: «legendary» Rubin formally joined the coalition in the whole pompous voice. If he is known for his calm, warns of impending disaster, it is worth paying attention ».
Rubin continued attacks on government policy, speaking on 13 January at a conference in Washington, where he warned that the growing deficit may also lead to an increase in interest rates and a sharp drop in the dollar. «The development of the deficit could seriously and irreversibly affect the expectations and trust. This, in turn, can run samousilivayuschiysya negative cycle among the primary fiscal deficit, financial markets and real sector », - he said.
As a former Finance Minister and former head of the powerful investment bank Goldman Sachs, now a member of the Cabinet of the Chairman of Citigroup, the largest U.S. bank, Robert Rubin is well aware of the precarious state of the financial system, as well as on cases on Wall Street and the Bush administration. If he is so concerned about that so openly express their fears, all time to think about. The International Monetary Fund also expressed doubt that the United States will be able to support the existing long fiscal policy. «For the foreseeable future projected deficits entirely - written in the bulletin of the IMF for 7 January 2004 - The simultaneous emergence of fiscal deficits and current account deficit raises new worries».
The bulletin noted that the United States are on the path towards the growth of external debt, which in the next few years could reach up to 40% of GDP - an unprecedented level for a major industrial country. Together with the «indiscriminate» a dollar it could lead to «disadvantaged circumstances».
And while no one in his right mind will not use the advice from the IMF, most likely, the Fund has enough information to think about the economic incompetence of the Bush-Cheney administration.
The most crazy scheme
To say that this is understood in the leadership of the U.S. Federal Reserve, you can not. In his opening speech to the AEA conference in San Diego Federal Reserve chairman Alan Greenspan and the chief executive of Ben Bernanke insisted that inflation was not a problem. Bernanke argued that the rate of core inflation in the United States over the past 40 years, there have been no lower than today, and there is even a tendency to decrease. The spell «we have no inflation» - today the main slogan of propaganda offensive Fed. Incidentally, the chief executive of the U.S. Federal Reserve Ben Bernanke is the nickname «Benny-bubble» ... Severe underreporting the real level of inflation gives the Fed reason to believe that its policy of pumping liquidity is not a hyperinflationary. And because the underlying economic indicators such as GDP, is also distorted, it is easy to create the effect of making the dissolution of the apparent economic growth. Until two years ago, A. Greenspan has publicly declared that the Fed will act as a lender of last resort for financial markets, and that the American public will be called upon to come to the rescue banks, working with derivatives, if necessary. «Leverage is always accompanied by the unlikely possibility of a chain reaction, the cascade of defaults, which will lead to a financial explosion, if the process is not curbed. Only a central bank with its infinite capacity to create money with a high probability will be able to stop it before it becomes destructive. Therefore, central banks are in need lender of last resort », - he said. Poddakivaya him, Bernanke said then that the Fed can print money as much as is needed. The stated policy of urgent measures to save not only banks, but in general the financial markets remains in force, as shown by record managers Fed prepared for the AEA conference in San Diego. The paper argues that even with zero or near-zero discount rate at the Fed is a lot of opportunities to influence events through measures such as, for example, «unlimited» promise to repurchase the securities guaranteed by U.S. Treasury prices. In addition to Treasury securities, the Fed is also ready to consider other assets such as corporate bonds and equities, or foreign government bonds.
Plans for the Fed to rescue markets simultaneously derivatives, bonds and equities, using «unlimited» money supply when the total value of hundreds of trillions of dollars - it's the most crazy economic scheme ever offered.
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