Volcker warns of danger from U.S. deficits

(Reuters) - Former Federal Reserve Chairman Paul Volcker warned on Friday that trillion-dollar deficits posed a threat to the stability of the U.S. economy and the dollar, and said he is frustrated by the gridlock in Washington.

Speaking before the World Affairs Council of Oregon, Volcker said that "prolonging trillion dollar deficits can't be a reality" and that the United States is on course to have its public debt exceed the size of its gross domestic product.

Funny thing is though, Australia's debt already exceeds GDP, but anyway I think the real danger is contained in the following observation.

Volcker, who stepped down early this year as the chairman of President Barack Obama's Economic Recovery Advisory Board, said he was concerned about how the U.S. consumes and borrows "to the point that China, Japan and other foreign countries hold more than 5 trillion dollars of U.S. government obligations."

"Consider that statistic in the light of prospects for continuing deficits, doubts about future inflation and the international stability of the dollar," he said, noting that the U.S. is running out of time to fix things.

www.reuters.com...

Namely the stability, or lack of, the USD, especially being the world's reserve currency and so many US treasuries being held by the likes of China and Japan. This combined with Bernanke's QE and it drawing to a close (though it will likely continue in some form I'm guessing if things quickly head south) will be interesting times ahead to watch.

fannie wants more $$$$....
so well, don't think the tap is gonna be turned off anytime soon!!!

ca.news.yahoo.com...

What is Congress DOING? Are they all sitting around twiddling their thumbs, or what? The republicans swept the last elections... for what? To do NOTHING? I see nothing from this Congress that the last one failed to offer.

Which reinforces my sneaking suspicion that the think-tanks really are in charge, and the elected congress-people are just sitting around waiting for the arrival of their next unreadable bill that does nothing but funnel money from one set of pockets to another.

Originally posted by dawnstar
fannie wants more $$$$....
so well, don't think the tap is gonna be turned off anytime soon!!!

ca.news.yahoo.com...

Meanwhile congress continues to pass one bill after another that make it ever more difficult for any loan to be processed by anyone other than a government-run bank. Even though those government-run banks are clearly only a drain on society.

So Mae wants more money. Last time, they were bailed to save thier A$$, what did they do with it.

What are the chances that the US Gov will just say GLAFU! and just let them fail. OR are these companies now sooo secure in their grip on the treasury that they can just ask for money like a spoilt child robs money from his mums purse!

sickening

Well I wonder what they do do with it? I reckon they would pay themselves first with some big fat bonuses to boot.

Double post - sorry don't know what happened there.