Prime Minister Kevin Rudd is in the US. He and US president Barack Obama are busy congratulating each other on their debt laden stimulus packages and are urging the world in the lead up to next weeks G-20 summit to follow suit.
But the EU and now Britain are not so convinced the US & Australian policy is the way to go.
On the eve of the G-20 summit the Governor of the Bank of England Mervyn King has told British PM Gordon Brown to stop spending.
In a move that puts him at odds with British PM Brown King warns Britain cannot afford a second round of economic stimulus.
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“It would be sensible to be cautious about going further in using discretionary measures to expand the size of those deficits.”
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EU countries lead by the worlds leading export nation Germany have flatly rejected calls for a further massive stimulus package.
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The London (G-20) meeting risks being overshadowed by a dispute between Europe and the US over public spending. A series of leaders at an EU summit led by Angela Merkel, the Germany Chancellor, refused yesterday to go along with American calls for greater borrowing and spending by Europe.
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Meanwhile US treasury secretary Tim Geithner’s career is riding on the outcome of the US$1 trillion toxic debt buyback. After printing US$1 Trillion out of thin air last week, the Obama administration is trying to lure private investors into the rescue deal.
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The Obama administration has concluded it needs the private sectorto play a central role in fixing the economy. But according to The Wall Street Journal, weeks of searing criticism by politicians and the public had left bankers leery of working with the US Government.
Embattled US Treasury Secretary Tim Geithner unveiled the massive plan allowing private investors to buy toxic US mortgages using funds from the US taxpayer at a rate of $US6 of cheap government debt against $US1 in equity.
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Leading Economist and investor Marc Faber believes that the USA will eventually default on its debts. The only thing that will save it is hyperinflation. He says they have adopted the Zimbabwe model -- If something goes wrong just Print.
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