The Guardian
Vince Cable attacks 'rightwing nutters' over US debt ceiling talks
Business secretary says those trying to derail efforts to raise ceiling are bigger threat to world economy than eurozone crisis
Vince Cable also told the BBC's Andrew Marr show that the Bank of England may have to engage in more quantitative easing if UK economic growth stalls. Photograph: Reuters
Vince Cable has launched an extraordinary attack on "rightwing nutters" in America who are trying to block the raising of the US government's debt ceiling and who are, he said, a bigger threat to the world economy than problems in the eurozone.
Speaking on the BBC1's Andrew Marr show, the business secretary also suggested the Bank of England may have to engage in more quantitative easing – effectively printing money – as growth stalls. Cable said the deal struck in Europe last week to bail out countries such as Greece and Ireland had been a "significant step forward", but failed to the fundamental issues.
He said: "The irony of the situation at the moment, with markets opening tomorrow morning, is that the biggest threat to the world financial system comes from a few rightwing nutters in the American Congress rather than the eurozone."
Negotiations on raising the US government's debt limit above its current level of $14.3tn (£8.7tn) collapsed in acrimony late on Friday over details of a package of spending cuts and tax rises that would help to pay for such a move.
A visibly angry Barack Obama attacked the Republican speaker of the house, John Boehner, for refusing to return his phone calls and said he had been "left at the altar" in trying to reach an agreement. Most experts agree that if the US were to default on its debt payments, stock and bond markets worldwide would plunge, threatening a new great recession. The deadline for agreement is just over a week away, on 2 August.
On the crisis in the eurozone, Cable said the coalition government wanted to see the euro succeed, even though Britain was not a part of it.
With GDP figures this week expected to suggest that growth has stalled, the senior Liberal Democrat conceded that the state of the economy was "not great".
"It is not surprising that it isn't great because of the problems we inherited," he said, while dismissing the idea of easing the coalition's austerity measures. The UK was in a "German rather than Greek" position because there was confidence in the country's finances, he said.
There was also evidence of "rebalancing" in the economy, and the "beginning of the rebirth of manufacturing and exports".
"There is a genuine problem with demand, consumer demand. Again, it is not surprising there have been big shocks, world commodity prices going up has had a big effect on confidence here," he said, adding that quantitative easing (QE) would be the right approach if demand remained suppressed.
"The Bank of England is an independent body, we need to stress that, they need to make their own judgments ... but if there is a sustained period of weakness of demand, the right approach to that is not for the government to relax its fiscal discipline. We have to keep that going.
"But it is about the Bank of England pursuing policies of low interest rates that also helps keep our exchange rate down and helps exports.
"But also using the expansion of QE perhaps in more imaginative ways, not just acquiring government securities ... If we have a continuing problem of weak demand that is the way to deal with it."
http://www.guardian.co.uk/politics/2011/jul/24/vince-cable-us-debt-rightwing-nutters
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