U.S. should cut deficit to spur recovery, IMF says

[mahatmakanejeeves]

Source: Washington Post

By Howard Schneider
Washington Post Staff Writer
Thursday, July 8, 2010; 1:05 PM

The Obama administration is overestimating U.S. economic growth and needs to reduce its budget deficit far more aggressively, the International Monetary Fund said on Thursday in a report that targeted Social Security, the home mortgage interest deduction and other politically sensitive policies as ripe for cutting.

And in its first-ever analysis of the U.S. financial sector, the agency warned that the recovery and seeming health of the banking industry may be illusory, threatened by an expected wave of defaults on commercial real estate loans and possibly in need of another large injection of capital. Small- and medium-size firms, clustered on the West Coast and in the South, are at particular risk from what may be a trillion dollars worth of bad loans for offices and other commercial buildings, IMF officials said in a briefing.

Though the economic recovery in the United States "has become increasingly well established . . . the risks are tilted to the downside," said David Robinson, deputy director of the IMF's Western Hemisphere department. Recent data "have increased those downside risks."

The assessment is in line with growing concern among members of the U.S. Federal Reserve and elsewhere that the U.S. recovery is losing steam. The IMF said recent data -- whether the slow advance of hiring, a laggard home market, or a weak stock market -- are not enough in themselves to downgrade its forecasts for U.S. growth, which it predicts will be 3.3 percent this year and 2.9 percent next year.


Read more: http://www.washingtonpost.com/wp-dyn/content/article/2010/07/08/AR2010070802309.html

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The proud Bush* legacy grows. The U.S. has fallen to the point that the IMF feels the need to weigh in with advice.

[closeupready]

1. Fine, as long as the measure of first resort is raising taxes on the wealthy.

Yes, this means almost everyone inside the DC Beltway. Which, of course, as we all know, means it will be the measure of last resort.

[xchrom]

2. Fuck the IMF. Seriously - fuck 'em. Nt

[99 Percent Sure]

3. Isn't this the same agency that briefly had Paul

Wolfowitz at the helm? I believe so. Unfortunately, I don't think they're creditable anymore.

If they ever were.

[bossy22]

4. Yes, great idea.....

its not like we are in a liquidity trap and deflation isnt an issue :sarcasm:

Yes the U.S. is running large deficits, and yes we should reduce them but the time to reduce is not now; especially not at the expense of cuts to vital programs which add much to our economy (paul krugman had an interesting article in his blog about how spending cuts could actuially increase the deficit).

We should start with minor changes; like repealing the bush tax cuts. IIRC that would add almost 200 billion a year to the tax revenue.

[Downwinder]

5. Proof of the "Peter Principle." n/t

[Bragi]

6. They would say that, wouldn't they

I think they represent the invisible bond vigilantes that Krugman speaks of.

[gratuitous]

7. Same lousy medicine they've prescribed for decades

And despite the deaths of so many of their patients, Dr. IMF continues to prescribe leeches for everything from iron poor blood to traumatic amputation. More bleeding! Call Theodoric of Yoric, stat!

[bemildred]

8. Tax the rich! Tax corporations! They have lots of money, use it to reduce the deficit. nt

[OJones]

9. It's very telling

that "small government" soldiers agree with the same international bodies they claim rob the U.S. of its sovereignty. In reality, they have become the manipulated foot soldiers for the most dangerous of these bodies... :,(

[BootinUp]

10. Nonsense

penny wise and pound foolish.

[Tempest]

11. Listen to the IMF

And then do the opposite.

The IMF wants to put America under its thumb just like it did to other countries, ending up by bankrupting them and destroying their economies.

[knitter4democracy]

14. I was just going to post the same thing.

If the IMF says it, do the opposite, and then you'll do fine. Listen to them, and you're toast.

[glitch]

16. So was I! "If the IMF says it, do the opposite" good advice, they are not on our side. nt

[Lydia Leftcoast]

17. EXACTLY!

After the Asian currency crisis of 1997, which was caused by foreign speculators, the IMF was going around telling all the Asian countries that they had to cut government spending, cut taxes, cut everything, and make their economies and currencies MORE open to foreign speculators.

Of all the affected countries, only Malaysia said, "Fuck that." They did the opposite of what the IMF suggested and quickly recovered.

[unkachuck]

12. "...overestimating U.S. economic growth and needs to reduce its budget deficit..."

....wrong, the administration is, "...underestimating U.S. economic growth and needs to increase its budget deficit..."

....fuck you, IMF, and all you do....

[Warren Stupidity]

13. The IMF has wrecked economies around the world. Why not ours too?

[Hawkowl]

15. Hang these bastards from lamposts

It would be nearly impossible to overstate the damage the IMF has caused the people of the world. Fucking, greedy, monsters.

[The Magistrate]

18. Hear Hear, Sir!

These people are the active principle of evil in the modern world....