Tagged: Capacity constraints

Increasing US debt poses national security threat: Clinton

MSN | PTI | 08/09/2010

us-debt-sinking The increasing American debt poses a national security threat, US Secretary of State today warned, saying it could impact Washington’s ability to exercise "global leadership". "Today more than ever, our ability to exercise global leadership depends on building a strong foundation here at home," Clinton said. "That’s why rising debt and crumbling infrastructure pose very real long-term national security threats," she said in a major foreign policy speech at Council on Foreign Relations, a Washington-based think tank. She warned the increasing debt poses a national security threat, saying the Obama Administration is focusing on this crucial aspect of the country’s economic policy.

She said US President Barack Obama understands this. "You can see it in the new economic initiatives that he announced this week and in his relentless focus on turning the economy around," Clinton said. The rising debt levels pose a national security threat, and it poses a national security threat in two ways, she explained later in response to a question. "It undermines our capacity to act in our own interest, and it does constrain us where constraint may be undesirable. And it also sends a message of weakness internationally," the top diplomat said. She underlined that it is very troubling that the "we are losing the ability not only to chart our own destiny but to have the leverage that comes from this enormously effective economic engine that has powered American values and interests over so many years".

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RBI can afford to be less hawkish – BarCap

Reuters | Aug 20, 2010 | 2:16pm IST

The Reserve Bank of India will probably pause after raising interest rates for a fifth time this year in September, signalling a less hawkish stance as inflation pressures begin to ease, an economist at Barclays Capital said. The Reserve Bank of India (RBI) has increased its main lending rate by 100 basis points since mid-March to rein in high inflation. The tightening policy has cooled headline annual inflation to just under 10 percent in July, after stubbornly staying in double-digits for five months. “The RBI is no longer behind the curve as far as managing inflation or inflation expectation is concerned,” Rahul Bajoria, regional economist at Barclays Capital, said in an interview. “So from that perspective I think the RBI can possibly afford to be slightly less hawkish from here on.”

Rising rates have also weighed on factory output, which rose at its slowest pace in 13 months in June at 7.1 percent from a year earlier. Exports grew an annual 30 percent in June, slower than 35 percent rise in May. Still, the RBI has forecast the economy will expand 8.5 percent in 2010/11 from 7.4 percent last year and the fastest pace among major economies after China. Bajoria reiterated the bank’s forecast for another 25 basis points increase in key rates by the RBI when it reviews policy on Sept. 16. “The market has fairly priced in both policy rate hike and liquidity constraints. Once the RBI has given its intention that repo rate will be the operating rate, I don’t think market is panicking on the liquidity situation,” he said. Continue reading