In Professor Anthony Sanders' testimony before the U.S. House Committee on Oversight and Government Reform Subcommittee on TARP, he outlines three main causes of the current European fiscal crisis: 1) excessive government spending leading to 2) excessive government debt coupled with 3) slow GDP growth.
Sanders also addresses how fiscal integration in Europe could affect the purchasing of U.S. Treasuries. Although Fed Chair Ben Bernanke recently announced that the Fed stands ready to provide further easing based on Eurozone risk, Sanders notes that the Fed and Treasury should save their bailout tools for the U.S. In fact, retirees and people living on fixed incomes will be further harmed by the Fed’s reaction to the Eurocrisis.
In addition to Fed operations, the International Monetary Fund (IMF) of which the U.S. is the largest stakeholder, is also active in the Eurozone bailout. The U.S. has a line of credit approved for an IMF crisis fund in the amount of $100 billion.
Sanders concludes his testimony by saying that the Eurozone's problems are structural, and cannot be solved by low interest loans and guarantees from the Fed and the IMF. The best way to protect U.S. taxpayers is to increase transparency at the Fed, take back the $100 billion line of credit at the IMF, and undertake spending cuts ourselves in order to reduce our deficit and massive debt loan.
Posts
EU Prepares To Tighten Screws On Russian LNG Imports
15 minutes ago
No comments:
Post a Comment