(28 June 2011 – United States) According to United States bank Morgan Stanley’s chief James Gorman, Greece is not the world’s biggest economic problem; the US is.He said the US$1.5 trillion (A$1.38 trillion) budget deficit was spinning a lack of confidence in the system, and a lot of uncertainty was slowing it down.
Washington must show it acknowledged the problem and was doing something about it before confidence started to recover.
Mr Gorman expressed confidence in the strength of the Australian dollar, saying it would remain ‘pretty solid’ for the foreseeable future.
‘US interest rates hold the key to the Australian dollar, but right now where US rates are I think the Australian dollar is fairly solid,’ he said.
He also expressed confidence in the Chinese government’s handling of the economy.
‘The Chinese administration is managing extremely well. Its focus is now on the intended and unintended consequences of its expansion, things like pollution, food supplies, the labour issues,’ he said.