- WASHINGTON (Reuters) -- U.S.
Federal Reserve Chairman Alan Greenspan told France's Finance Minister
Thierry Breton the United States has "lost control" of its budget
deficit, the French minister said on Saturday.
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- "'We have lost control' -- that was his expression,"
Breton told reporters after a bilateral meeting with Greenspan.
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- "The United States has lost control of their budget
at a time when racking up deficits has been authorized without any control"
from Congress, Breton said.
-
- "We were both disappointed that the management of
debt is not a political priority today," he added.
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- Ministers from the Group of Seven rich nations on Friday
called for vigorous action around the world to curb rising imbalances in
international trade and investment accounts.
-
- A decrease in the U.S. budget deficit were cited by the
G7 as one way to ease those imbalances. U.S. Treasury Secretary John Snow
said the U.S. administration was still committed to halving its budget
deficit by 2009.
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- Breton spoke as International Monetary Fund Managing
Director Rodrigo Rato said U.S. plans to cut its government expenditures
now looked ambitious in the light of huge reconstruction costs to be borne
in the wake of Hurricane Katrina.
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- Breton said: "The situation that is creating tension
today on the currency market ... is clearly the American deficit."
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- The United States needed to address its budget deficit,
he said, adding: "It seems to me that my counterpart John Snow is
completely aware of this, he wants to harness the problem, but it seems
to me he doesn't have the room for maneuver."
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- Breton added that after hearing Greenspan talk about
inflation: "One has the feeling -- though he didn't say so -- that
interest rates will probably continue to rise slightly until his departure."
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- Greenspan is due to step down as Fed chairman in January
after 18 years in the post.
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- Asked if G7 finance chiefs would meet as usual in February
next year as well as gathering for an extraordinary meeting in December
this year -- partly to pay tribute to Greenspan before his departure --
the French finance chief said: "Yes, yes. Next February as well."
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- He said France was "not against" the idea of
enlarging the Group of Seven, a notion that has gained impetus at these
meetings.
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