BIS warns on domestic and international debt (global crises)

FTimes ^ | 6/27/05 | By Chris Giles in London

[thinking4me]

BIS warns on domestic and international debt By Chris Giles in London Published: June 27 2005 20:26 | Last updated: June 27 2005 20:26

Growing domestic and international debt has created the conditions for global economic and financial crises, the Bank for International Settlements warned on Monday.

The Basel-based organisation's annual report said no one could predict if and when such international economic imbalances would unravel but “time might well be running out”.

The warning by the world's oldest international financial institution the central bankers' bank was designed to puncture the complacency prevalent among economic policymakers after 2004's global growth, the strongest for nearly 30 years.

The BIS urged countries to act together to reduce the risks of disruption caused by “imbalances” in their own economies as well as by the ever-rising US trade deficit and corresponding trade surpluses, particularly in Asia. William White, the head of the bank's monetary and economics department, said the time had come “for a measured withdrawal of the stimulus put into the system.” The BIS report said “one obvious answer” would be to increase interest rates to curb debt-fuelled consumption and asset price booms. But it said such monetary tightening would conflict with the desire to keep unemployment low and avoid deflation.

The BIS urged the US to act first because it “probably faces the least conflict in its macroeconomic policy settings”.

“Given the size of the [US] government deficit, the obvious first step would be to cut expenditures and raise taxes”.

But the BIS report questioned the Bush administration's willingness to impose the required policies to back up its deficit reduction ambition.

Without a smaller budget deficit, lower private sector consumption and higher savings, there was little likelihood of stabilising the ballooning US current account deficit. The ever widening deficit “could eventually lead to a disorderly decline of the dollar, associated turmoil in other financial markets, and even recession”.

Asian currencies, should appreciate against the US dollar, the report said. “Obvious candidates for revaluation,” it said, were the “the Chinese renminbi and other Asian currencies that take their cue from it.”

But the BIS said it doubted politicians or central bankers had the will to implement the necessary policies.

“If what needs to be done to resolve external imbalances is reasonably clear, it also seems clear that much of it is simply not going to happen in the near term,” the report said.

[thinking4me]

MONEY IS NOT THE ROOT OF ALL EVIL BUT USURY INC.

THE VERY 1st GLOBAL CRASH RIPPLED THROUGH THE ANCIENT EMPIRE OF CHINA 650 YEARS AGO. DID YOU KNOW??

Of course, the Founding Fathers knew this: "The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered. "... - Thomas Jefferson... No state shall coin money emit Bills of Credit; make anything but Gold and Silver a Tender in payment of debts. U.S.Constitution A1s10

The architect of our current system: "By a continuous process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method, they not only confiscate, but they confiscate arbitrarily; and while the process impoverishes many, it actually enriches some....The process engages all of the hidden forces of economic law on the side of destruction, and does it in a manner that not one man in a million can diagnose." - John Maynard Keynes Economic Consequences of the Peace, 1920

ONE OF THE BEST SOUND MONEY WEBSITES RECOMMENDED BY THE STATE OF NH: Let's make this crisis the very last one. Time to unite against Usury Enslavement Inc which has plagued societies since the day the Powers-That-be understood that controlling the money supply was controlling everything. If you're willing to volunteer, please drop us a note. Living in NYC a plus.

[bkepley]

I'm not sure if hurting US pocket-books will lower the trade defict. It seems to me that it might even raise it.

[quantfive]

I am in NH! Anyways, can't get involved in this fight, helping out our troops in Iraqi and my resources are limited.

My comment is that I agree with Jefferson. Look what has happened in the last 40 years. In my dads day, he was the bread winner. No we did not have 3 cars or 3 TV sets, but we went on vacation and had a decent home to live in, good food to eat, etc. In the 80's we got a tad bit materialistic on cars and electronics, so mom went to work also for the extras. Now, in most American homes, mom and dad both work full time and cannot afford the extras. Next, it will be that Americans never own their homes or assets at all. In fact, I think most of this generation will see that come to pass. The "creative" financing offered by banks for easy credit cards and mortgages is creating such a situation...