Friday, May 27, 2005

$900 Billion US Deficit Predicted for 2006 by OECD Report

Jim Sinclair of points out that the OECD has made a startling prediction that runs totally against market expectations that are based on comments from the Federal Reserve.

Jim says "First the Fed Chairman announced the dollar bottom and the bond trading major international investment houses followed his lead in the dollar.

Next the Administration made a major speech predicting a lower US Federal Budget deficit in fiscal year 2005 - without any doubts or reservations. Adding to this major economic statement was the definitive comment that the US Federal Deficit would be cut in half by 2009."

Then came this statement by the OECD which indicated that the final deficit, as Jim says the bottom line, the speedometer of money leaving the US, the measurement of dollars entering into international market, the USA’s Current Account deficit will in calendar 2006 reach the historic level of $900 billion. That would represent 6.7% of the predicted GDP at that time.

Jim says "If the GDP does not make its predicted level in 2006, then what a black hole of Calcutta the dollar will find."

OECD chief economist Jean-Philippe Cotis told the Financial Times: “We are not saying there will be a doomsday tomorrow morning ... but because the adjustments [to global imbalances] are relatively slow, we are running the risk that an accident will happen. [..] Time is running out – the numbers are getting big, big, big.”

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