Greenspan Says Worried on Budget By Andrea Ricci NEW YORK (Reuters) - Federal Reserve Chairman Alan Greenspan said on Thursday he was not "overly" concerned about the record U.S. trade gap and heavy consumer debt loads, but the nation's budget outlook gave him pause. "The resolution of our current account deficit and household debt burdens does not strike me as overly worrisome, but that is certainly not the case for our fiscal deficit," Greenspan told the Council on Foreign Relations in New York. "Our fiscal prospects are, in my judgment, a significant obstacle to long-term stability because the budget deficit is not readily subject to correction by market forces that stabilize other imbalances," he said. The Fed chief said rapid globalization may have allowed the United States to carry large trade and budget gaps so far without economic harm. "Has something fundamental happened to the U.S. economy that enables us to disregard all the time-tested criteria for assessing when economic imbalances become worrisome?" Greenspan asked rhetorically. "Regrettably, the answer is no; the free lunch has still to be invented." "We do however, seem to be undergoing what is likely, in the end, to be a one-time shift in the degree of globalization and innovation that has temporarily altered the specific calibrations of those criteria," he said. Foreign investors are effectively funding record shortfalls in the U.S. budget and current account, the broadest measure of the nation's trade, and some economists fear an abrupt reversal in investor confidence could hit the American economy hard. FREE TRADE PLEASE When exchange rate swings are taken into account, Greenspan said, global investors so far have only modestly shifted away from dollar assets. He did repeat, however, that foreign investors may at some point decide they are holding too many dollar-denominated assets. He also reiterated that if the dollar were to drop further, foreign exporters could decide to no longer absorb the impact by accepting smaller profits. In that case, he said U.S. import prices would rise and the trade gap would narrow. Greenspan credited increasingly open global trade with lowering inflation and stabilizing economies, and said it could rebalance global trade without a crisis.     Continued ... Quelle "Greenspan Says Worried on Budget" : reuters.com Main page for "Greenspan Says Worried on Budget"