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How Budget Deficit May Become a Real Problem for US

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us, opinion, budget deficit, inflation, recession, us federal reserve, joe biden, us midterm elections

us, opinion, budget deficit, inflation, recession, us federal reserve, joe biden, us midterm elections

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President Joe Biden’s plan to slash student loan debt could cost US taxpayers about $400 billion, the nonpartisan Congressional Budget Office said on September 26. This did not, however, prevent congressional negotiators from agreeing on nearly $12 billion in new military and economic assistance to Ukraine.

“The US budget deficit is an old story,” said Dr. Paul Craig Roberts, a US economist and ex-assistant secretary of the Treasury under Ronald Reagan. “The ‘Reagan deficits’ (approximately $200 billion) according to critics were supposed to collapse the US economy in 1982-84. In 2020, the US budget deficit was $3,100 billion – 15 times larger. In 2021 the deficit was $2,800 billion. This year it is projected to be $1,000 billion but will be much larger as the Federal Reserve is driving the economy into recession.”

However, US citizens do not appear concerned by the mounting numbers since they have been hearing about large and growing budget deficits all their lives and nothing yet has happened, the economist remarks.

To complicate matters further, the deficit issue has become a “rhetorical shell game” for the government, the Washington Post’s Glenn Kessler wrote last week. For instance, earlier this month President Joe Biden bragged about cutting the $350 billion budget deficit last year, “but the reality is he’s increased the budget deficit, not reduced it,” Kessler highlighted.
Thus, the budget deficit was expected to decline $875 billion in 2021, but Biden’s additional COVID relief and other new policies resulted in a more modest decline of $360 billion. At the same time, the US president’s decision to reduce student debt for millions could cost somewhere between $400 billion and $600 billion over a decade, according to some estimates. In addition, there are “unexpected emergencies,” such as the Ukraine conflict, which put pressure on the federal budget, Kessler remarked, citing a new accounting by the Committee for a Responsible Federal Budget, which claims that an additional $4.8 trillion in borrowing has been added in the 2021-2031 period under Biden.
Dollar bills are deposited in a tip box, May 24, 2021 in New York. - Sputnik International, 1920, 21.09.2022

How the US Fed Rate Hike May Backfire on Global Economy

“As long as the dollar is the reserve currency and is used to settle most international payments, the US deficits are financed by countries holding their foreign reserves in US dollar securities,” explains Dr. Roberts. “So foreigners finance the US deficit and the Federal Reserve itself buys any overhang. This is why the deficit has not been a problem.”

Still, there are several reasons why the US budget deficit could indeed become a financing problem, according to the economist.

First, the Federal Reserve announced that its current policy is to sell bonds, removing the central bank as a purchaser of US Treasury debt, Dr. Roberts pointed out. Second, US sanctions by abusing the world currency role is causing other countries to move away from using dollars to settle their international transactions. “That means less dollars will find their way into foreign central bank reserves,” the former Reagan official elaborated.

As of yet, however, the US dollar is safe and sound while other reserve currencies – the euro and UK pound – are collapsing due to sanctions-produced energy shortages and possible industry shutdowns, according to the economist. Having sucked the life from the euro and the pound. the greenback remains the preferred and strongest currency. “Until Russia, China, and participating countries create their own payments and clearing system, there remains no alternative to the US dollar,” Dr. Roberts remarked.

Knife crime - Sputnik International, 1920, 26.09.2022

‘Absolutely Hammered’: UK Pound Slides to Its Lowest Level Against US Dollar Since 1971

Greenback’s Strength Not Infinite, Recession to Bite US

While this state of affairs lulls some US politicians into believing that they can rely on the dollar’s strength forever and continue to fund overseas wars, the US’ domestic problems pile up.

“US infrastructure is wearing out,” says Dr. Roberts. “Much of it is financed by local and state governments, and their revenue position has been badly damaged by the offshoring of US manufacturing, which has deprived them of tax revenues while massive influx of immigrant-invaders have pushed up the cost of supporting the illegal entrants. As the federal government permits the entry of millions of illegals, perhaps the federal government should be assuming the related costs instead of sending weapons to Ukraine.”

In addition, soaring prices are eating away at savings and real wages as inflation still remains at a 40-year higher. Polls indicate that inflation has largely become a major concern of voters along with crime. The unfolding situation may deal a heavy blow to the Democratic Party in the November midterms by stripping it of its slim majority in the US Congress. If this happens, it may curb the Biden administration’s political ambitions and disrupt its plans with some Republican lawmakers threatening to impeach the incumbent.
US police crime scene tape - Sputnik International, 1920, 26.09.2022

Crime and Inflation Creating Difficult Headwinds for Democrats Ahead of Midterms, Observers Say
There is yet another problem on the horizon, according to Dr. Roberts. The economist assumes that the Federal Reserve will drag the nation deeper into recession by aggressively increasing interest rates at a time when consumer demand is cooling and the US economy is slowing down.

“The effect of the Federal Reserve’s recession on the deficit will be far greater than the military expenditures for Ukraine, which are mere pocket change,” the former Reagan official notes.

Last week, the Federal Reserve raised its benchmark interest rate by 75 basis points again with its chair, Jay Powell, planning an additional 1.25 percentage points’ worth of increases this year. Even though these interventions could hurt the labor, housing and stock markets, Powell is not going to back down. “I wish there were a painless way to do that. There isn’t,” the Fed chair told journalists last week.



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‘Destitution is almost inevitable’: Afghan refugees in Greece left homeless by failed system | Migration and development

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Mohammad Ashraf Rasooli, 70, looks at his five-year-old granddaughter, sitting on the floor next to him watching cartoons on a phone. They live in a two-bedroom flat in a suburb of Athens. “Even tomorrow, we don’t know what will happen to us,” he says.

The former judge and legal adviser to the Afghan Ministry of Justice, who had a role in putting together the 2004 Afghan constitution, is facing eviction with his family, including his three grandchildren. This is in line with regulations in Greece, which state that once someone has obtained refugee status, they must leave the accommodation provided for them within 30 days.

Since being evacuated to Greece last October, the family have been in limbo, hoping to join relatives in the UK and grieving for lives left behind in Kabul. Due to Rasooli’s high-profile work, as well as that of his daughter, a former journalist, and his son-in-law Fazel Sultani, a prosecutor at the Ministry of Justice, the family had gone into hiding after the Taliban stormed Kabul.

“We had a lot of problems, because the Taliban were saying if somebody had worked with NGOs or international organisations we’d be killed. It was very difficult for me to be there; we went to hide in a few places until we got evacuated,” says Rasooli. He scrolls through his phone to show photos of his home, pointing out books on the shelves, including legal texts he wrote, which he has been told have since been destroyed by Taliban soldiers.

The family has tried to make the best of things and the children are in Greek schools, but until recently, Rasooli feared to go outside in case his papers were checked. They had to wait until this month to receive asylum seeker ID cards.

They struggled to navigate a catch-22 system whereby access to rent subsides requires having a rental contract, while landlords will not rent without proof of the subsidies.

Rasooli and his family are not alone, says Minos Mouzourakis, an advocacy officer at Refugee Support Aegean (RSA). “Destitution is almost inevitable for refugees recognised in Greece. Expecting them to promptly leave accommodation despite exclusion from social welfare and protracted, often year-long, delays in renewing documents is a policy choice breaching the country’s legal obligations according to jurisdictions across the continent,” he says.

Mohammad Ashraf Rasooli (second left), sits with Fazel Sultani, his son-in-law, granddaughter and daughter in their flat in Athens, Greece.
Mohammad Ashraf Rasooli (second left), sits with Fazel Sultani, his son-in-law, granddaughter and daughter in their flat in Athens. Photograph: Anna Pantelia/The Guardian

RSA has gathered more than 100 testimonies of recognised refugees in Greece who have turned to jobs such as collecting waste cardboard around Athens to sell to recycling companies. For such work they may earn between €10 and €20 a day.

RSA has recorded cases where refugees returned to Greece have faced destitution, such as Soraya* and Somaya* from Afghanistan who were sent back from Sweden in June this year. They are now reliant on soup kitchens and solidarity networks and must wait until January 2023 to get identification documents. Some courts, in countries such as Germany, have halted returns of refugees to Greece judging that they are likely to face inhumane or degrading treatment.

“The situation for recognised refugees in Greece is dire. It is commonplace that people granted protection status in Greece face destitution and homelessness following their positive asylum decision,” says Lucy Alper, a legal coordinator with Refugee Legal Support in Athens.

“The only integration programme, Helios, funded by the EU and implemented by the International Organization for Migration (IOM) is not fit for purpose. Many people enrolled in the Helios programme cannot access the limited rental subsidies offered, as they must first open a Greek bank account, pay a deposit on a flat and sign a house contract via the government’s online platform. Barriers are at every turn, exacerbated by the bureaucracy of the Greek asylum system.

“Notwithstanding these failures, people are being evicted from their accommodation. There is no safety net,” says Alper.

The IOM says 19,000 people had leased an apartment so far, which spoke to the “feasibility of the requirements”. They added there are, “all the necessary services to support recognised refugees in finding and leasing apartments … IOM in coordination with its partners ensures support and interpretation in issuing all required documents … whenever obstacles are encountered, targeted support is provided to solve possible problems.” It says it had no “recorded cases” of difficulties from those who applied within the appropriate time frame due to bureaucracy.

Rasooli hopes to go to the UK under the Afghan relocations and assistance policy (Arap) but has a rejection that is under review. His initial rejection letter, seen by the Guardian, states that since he has asylum in Greece, he will have access to medical care and is in relative safety – facts disputed by NGOs who have documented the precariousness of life for refugees in the country.

For now, the family remains in Athens, hopeful for an offer of an apartment for the short term. Nothing about the future is certain.

The Greek Migration Ministry did not respond to a request for comment.

* Names have been changed to protect identities

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Europe Lost Russia as Energy Supplier, Russian Envoy Says

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russia, international energy agency (iea), mikhail ulyanov, envoy, energy supplies

russia, international energy agency (iea), mikhail ulyanov, envoy, energy supplies

VIENNA (Sputnik) – Russia’s Permanent Representative to International Organizations in Vienna Mikhail Ulyanov said Europe has lost Russia as its largest energy supplier.

“Isn’t it vice versa: Europe has lost Russia as its largest energy supplier to get the opportunity to buy the US LNG at a much higher price? Great achievement!” Ulyanov wrote on Twitter.

It was his response to a user post that quoted the head of the International Energy Agency (IEA) saying Russia had lost Europe as its largest energy client “forever.”

IEA chief Fatih Birol said in October that Russia had lost the European oil and gas market forever and would face a drop in production. The West stepped up sanctions pressure on Russia over Ukraine, which led to higher prices for electricity, fuel and food in Europe and the United States.

A view shows gas metering units at the Gazprom's Amur Gas Processing Plant near the town of Svobodny, Amur Region, Russia. The plant was launched on June 9, 2021 - Sputnik International, 1920, 27.11.2022

Russia Determined Not to Sell Energy Resources to Those Who Set Price Caps: Kremlin

Russian President Vladimir Putin said cheap and reliable Russian energy resources were Europe’s competitive advantage, and even a partial rejection of them already had a negative impact on its economy and residents. The US, pushing through the EU’s complete rejection of Russian energy carriers and other resources, is leading to the de-industrialization of Europe, he said.

Putin, commenting on the West’s idea to limit prices for Russian energy resources, said Russia would not supply anything abroad if this was contrary to its own interests.

Deputy Prime Minister Alexander Novak said Russia would not supply oil to countries that set any price cap. He added that such restrictions were interference in market tools, and Moscow was prepared to work with consumers ready for market conditions.



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Kirchner: Argentina’s vice-president blasts ‘firing squad’ overseeing her corruption trial | International

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“Last words…” said Cristina Fernández de Kirchner from her office in the Senate, staring at the camera. She paused for a second, smiled and delivered the line she had already envisaged as a headline. “Never has a judicial term been so appropriate to define what this court is: it is a firing squad.”

Her words were aimed at three federal judges who on December 6 will decide whether she is guilty of leading an alleged scheme to divert state funds through public works contracts. The prosecution wants Fernández de Kirchner to spend 12 years behind bars and be permanently barred from holding public office.

Fernández de Kirchner, 69, has been charged with “illicit association” and “aggravated fraudulent administration” in connection with a corruption case involving 12 other defendants and known in Argentina as the Vialidad Case. The 51 contracts under scrutiny were awarded in the province of Santa Cruz, the political cradle of Kirchnerism, to companies owned by a friend of the Kirchners, Lázaro Baez, over a 12-year period (Baez has since been sentenced to 12 years in prison for money laundering). Prosecutors said many contracts were inflated and some were never carried out. They have estimated that the scheme cost the state around $1 billion. The defendants include officials accused of collecting bribes and businesspeople suspected of paying them.

But the vice-president claims to be a victim of political persecution.

“A government that was democratically elected three times is not an ‘illicit association’,” she said, alluding to the government of her late husband Néstor Kirchner (2003 -2007) and her own two terms in the president’s office between 2007 and 2015.

On Tuesday, the vice-president spoke for less than 20 minutes, a far cry from the long speeches she has given in the past in court. At her first hearing on December 2, 2019, she claimed to be the victim of a case in which the sentence had been decided ahead of time. The ultimate goal of the trial, according to the vice-president, is to remove her from politics and erode Peronism, the movement she represents.

“The sentence is written, but I never thought it would be so badly written,” said Fernández de Kirchner, accusing the two lead prosecutors in the case, Diego Luciani and Sergio Mola, of spreading lies about her. To reinforce the idea of the firing squad, she recalled the assassination attempt against her outside her house in early September.

Kirchner has maintained throughout the trial that the entire investigation against her is a set-up by the opposition to imprison her. Her lawyers have uploaded a document entitled “The Twenty Lies of the Vialidad Case” to social media.

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