Tags: us | economic | inflation | fed | bernanke | central | bnank

Singapore Fund Chief Sees Strong US Growth

Sunday, 06 Mar 2011 03:06 PM

The United States is set to roar out of its current funk, posting growth as high as 4.5 percent with little risk of high inflation, says Tony Tan Keng Yam, chief of Singapore’s massive sovereign wealth fund.

The strange part is, Americans themselves don’t seem to believe it, he told The Wall Street Journal in a rare interview.

Americans “don't see the potential in their own economy, which is one of the most innovative, open economies in the world. Foreigners seem more optimistic," said Tan.

Tan told the newspaper that he expects growth of between 4 percent and 4.5 percent in 2011. The fund has a third of its $100 billion invested in this country and would add to that, he told the Journal.

Tan agrees with Federal Reserve Chairman Ben Bernanke’s assessment that “slack” in the economy means inflation risk is low, but he added that spending on infrastructure and education have fallen behind.

President Barack Obama has repeatedly defended spending on education amid rising calls for budget cuts in Washington. The deficit is on track to hit $1.65 trillion this fiscal year, according to White House projections, or 10.9 percent of gross domestic product.

A new survey by the National Association for Business Economics sees a deficit in 2011 of $1.4 trillion, up from its earlier estimate of $1.1 trillion in November. A faster-growing economy coupled with aggressive spending cuts could result in lower numbers as a percent of GDP, if Tan is correct.

Tan’s views are in line with those of billionaire Warren Buffett, who told CNBC last week that unemployment would fall to the “low 7” percent range by Election Day 2012.

Buffett disagrees with Bernanke’s approach, saying that it was time for the Fed’s historic easing experiment to wrap up. The central bank has created roughly $2 trillion in new money since the crisis began, using the cash to keep interest rates low by buying U.S. debt and by indirectly capitalizing the banks.

“I have enormous respect for Ben Bernanke. He knows more about the Fed than I do by a factor of 100-to-1. But, in the end, I don’t think we need more of that now,” Buffett said, speaking directly of the Fed’s controversial easing program, due to expire in June.

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The United States is set to roar out of its current funk, posting growth as high as 4.5 percent with little risk of high inflation, says Tony Tan Keng Yam, chief of Singapore s massive sovereign wealth fund. The strange part is, Americans themselves don t seem to believe...
us,economic,inflation,fed,bernanke,central,bnank,monetary,policy
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2011-06-06
Sunday, 06 Mar 2011 03:06 PM
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