Greenspan: Economy risks stagnation or worse
New York: The Federal Reserve Chairman Alan Greenspan has warned that unless lawmakers come to grips with spiraling US deficits, the economy was at risk of stagnation "or worse."

"Under existing tax rates and reasonable assumptions about other spending, these projections make clear that the federal budget is on an unsustainable path, in which large deficits result in rising interest rates and ever-growing interest payments that augment deficits in future years," Greenspan said in testimony prepared for a Senate Budget Committee hearing.

He said the danger was that deficits would keep rising as a percentage of total national output. "Unless that trend is reversed, at some point these deficits would cause the economy to stagnate or worse," said Greenspan.

The approaching surge of American retirees was adding urgency to the need to deal with budget constraints in light of uncertainty about the scale of looming medical and retirement costs, according to Greenspan. He emphasized that the United States may already be in a position where it cannot meet commitments made to the baby boom generation and urged benefit cuts, if needed, be made as soon as possible.

Greenspan plans to leave his post next January after 18 years at the helm of the Fed.
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Portman for tougher approach on China
Washington: Rob Portman, a Republican member of Congress nominated by President George W Bush to be his top trade negotiator, has told Congress that the United States needs "a tougher approach" to China.

Portman said he would order "an immediate top to bottom review" of the various trade complaints against China if confirmed by the Senate. He also said he would make an early trip to China to "demonstrate the urgency of resolving these problems and to deliver a strong message in person to Chinese officials."

"I think we need a tougher approach. I think we need to hold China to its commitments," Portman told the Senate Finance Committee during his confirmation hearing. Portman's comments signalled a stronger push for China to deal with a soaring trade deficit which last year hit USD 162 billion, the largest deficit the United States has ever recorded with any country.

Last week, Treasury Secretary John Snow increased pressure on China to stop pegging its currency, the yuan, to the US dollar. He argued that China has done enough to prepare its economy for a switch to a currency whose value is set by market forces and that the change could be done immediately.
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