US current account deficit 'unsustainable'
Timothy Geithner, president of the New York Federal Reserve, on Monday dismissed the view that the US current account deficit was sustainable, suggesting the risk of a sudden fall in the dollar would grow the longer the trade gap widened. In a speech at the Royal Institute of International Affairs in London, Mr Geith-ner said the problem could not necessarily be expected to solve itself."Time does not necessarily help. The longer these gaps continue to build, the greater the ultimate adjustment required, and the greater the risks that accompany that process," he said. "The plausible outcomes range from the gradual and benign to the more precipitous and damaging," he said. "The size and duration of these [global] imbalances, perhaps the most visible of which is the US current account deficit, present challenges – and risks – for the world economy."
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