Revealing just how dangerous the Bush administration's far-right economic policies are, the United Nations today issued an alarming report asking other industrialized countries to help the United States deal with its exploding trade and budget deficits because they threaten the health not just of America's economy, but of the global economy. While President Bush continues trumpeting the benefits of "free trade," he has little to say about the fact that his administration has sat by while America's trade deficit hits historic highs ($600 billion for 2004 alone).
On the budget deficit, the picture is the same. As the NY Times reports, "The United States has amassed a debt without precedent" with the IMF calculating that our $631 billion deficit is 5.4 percent of GDP. And guess who is increasingly financing that deficit? Foreign banks. As the Financial Times reports, "during the past few years the US has become dependent, not so much on millions of investors around the globe but on a few individuals in a few of the world's central banks." Specifically, in 2003, foreign banks financed 83 percent of the U.S.'s current deficit. The People's Bank of China increased dollar reserves by $207 billion in 2004 alone, "financing nearly a third of the US current account deficit."
