Economics Nobelist on the IMF and America's fiscal incontinence

[swag]

http://www.resourceinvestor.com/pebble.asp?relid=19932

The IMF's Problem Called America

By Joseph Stiglitz

NEW YORK (Business Day) -- The International Monetary Fund’s (IMF’s) recent meeting was lauded as a breakthrough, with officials given a new mandate for “surveillance” of the trade imbalances that contribute significantly to global instability. The new mission is crucially important, both for the health of the global economy and the IMF’s own legitimacy. But is the fund up to the job?

There is obviously something peculiar about a global financial system in which the richest country in the world, the U.S., borrows more than $2 billion a day from poorer countries - even as it lectures them on fiscal responsibility. So the stakes for the IMF, which is charged with ensuring global financial stability, are high: if other countries eventually lose confidence in an increasingly indebted U.S., the potential disturbances in the world’s financial markets would be massive.

. . .

With the U.S. trade deficit the major global imbalance, attention should focus on how to increase U.S. national savings - a question that U.S. governments have struggled with for decades. While it is true that tax preferences might yield slightly higher private savings, the loss of tax revenues would more than offset the gains, thereby actually reducing national savings. There is only one solution: reduce the fiscal deficit.

In short, the U.S. bears responsibility both for trade imbalances and the policies that might quickly be adopted to address them. The IMF’s response to its new mission of assessing global imbalances will thus test its battered political legitimacy. At its recent meeting, the fund failed to commit itself to choosing its head on the basis of merit, regardless of nationality, and it did not ensure that voting rights were allocated on a more limited legitimate basis. Many of the emerging-market countries, for example, are still underrepresented.

If the IMF’s analysis of global imbalances is not balanced, if it does not identify the U.S. as the major culprit, and if it does not direct its attention on the U.S.’s need to reduce its fiscal deficits, through higher taxes for America’s richest and lower defence spending, the fund’s relevance in the 21st century will inevitably decline.

[FogerRox]

1. Hell yeah, Impeach Indict

[sadiesworld]

2. Stiglitz needs to give it a rest.

He, along with the rest of the globalists, knows that there isn't going to be any higher taxes on the rich or decreases in defense spending. Any reduction in deficits is going to come directly out of the hides of the worker bees in SS and Medicare cuts, social program cuts, etc.