The US economy is enjoying a growth spurt that will not last beyond this year because it is driven by military spending and tax cuts while the George W. Bush administration turns a blind eye to a looming deficit crisis, American economists said in Havana on Monday.
"Developing countries that still rely on the American market as an engine of growth should be cautious about expecting too much after 2004," said University of Texas professor James Galbraith at an annual economists conference on globalization issues hosted by Cuba.
Economic Nobel laureate Daniel McFadden warned that the US was heading toward a generational demographic crisis in social security and Medicare that will require government funding, and in turn imply unsustainable deficits.
"The current administration in Washington is making no serious effort to deal with the looming failure of its programs," McFadden said in a lecture to 1,300 economists from 43 countries.
"There is a high risk that social and financial turmoil will result, threatening the continued prosperity of the US economy and the stability of the globalized markets in which it is a key player," he said.
Galbraith said the current "spurt of growth" in the US economy was kicked off by the increase in military spending for the Iraq war and sustained over the summer by an infusion of cash into household spending.
"We are going to see another such infusion in the second quarter, so it is not over yet," he said, but added that future tax cuts will not add to household spending and that a slowdown is predictable.
Galbraith, son of Harvard economist John Kenneth Galbraith, said the Bush administration ran policies designed to make the economy stronger in the short run, such as child credits and last year's tax cuts, to enhance its chances in this year's elections.
While the Federal Reserve said it can be patient before it raises very low interest rates, it will come under pressure to defend the dollar through higher rates, he said.
"Whether they yield to that pressure is more a question of when than if. I would not be at all surprised to see interest rates rising next year and that will cause further problems," Galbraith said.
McFadden won the Nobel Prize in 2000 with James Heckman, who also attended the Havana conference, for developing econometric theories and methods widely used in the statistical analysis of individual and household behavior.
McFadden said the unregulated flow of speculative "hot money" had created global financial volatility and burdened developing nations with unpayable debt and attacks on national currencies.
The support provided to nations in difficulties by the International Monetary Fund is often "cold comfort" due to painful austerity demanded in return for bailouts.
"We need to cool down hot money, keeping long term flows while reducing short term volatility, and warm up the cold comfort currently provided by the IMF to countries that are in trouble," he said.
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique