Uncle Sam gets warm welcome in Tegucigalpa

Tue Oct 28, 2:55 PM ET

Demonstrators burn a likeness of 'Uncle Sam's' top hat and closed access to a bridge, during a protest against the International Monetary Fund (news - web sites) in Tegucigalpa, October 28, 2003. Protesters demanded that the government not privatize services such as water and electricity, nor sign a debt payment agreement with the Fund. REUTERS/Daniel LeClair

http://story.news.yahoo.com/news?tmpl=story&u=/bw/20031028/bs_bw/nf200310283723db006
Business - BusinessWeek Online

"The IMF Would Rate Us as Dangerous"
Tue Oct 28, 8:24 AM ET Add Business - BusinessWeek Online to My Yahoo!



If the U.S. weren't the strongest country in the world, it would be rated as in fiscal danger by the International Monetary Fund (news - web sites) and World Bank (news - web sites), believes William Wolman, former BusinessWeek chief economist who is also an author and TV commentator. Wolman comes to that opinion by adding up the U.S. trade deficit and the budget shortfalls of government at all levels, which produces a ratio of debt to income he thinks the world financial bodies would consider perilous for nations other than the U.S. He recommends that investors diversify their holdings, and he especially cautions against counting on real estate to continue booming.


These were among the points Wolman made in an investing chat presented Oct. 23 by BusinessWeek Online on America Online, in replying to questions from the audience and from Jack Dierdorff and Karyn McCormack of BW Online. Following are edited excerpts from the chat. A complete transcript is available from BusinessWeek Online on AOL at keyword: BW Talk.


Q: I need to invest for income. Are bonds too risky right now?


A: I think there is some risk on bonds, but I always have the same recommendation on this. That is to say that the average investor should always have some of the government's TIPs, the inflation-protected bonds. These are, to me, about the safest investment around. I do worry, however, about inflation, particularly for the middle classes where the cost of health care, to some extent, and the cost of educating their children have really been soaring. Just as an example, I believe that the rise in tuition in public universities this year was on the order of magnitude of 15%, the biggest number ever, and pretty scary.

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