Putin: US a 'parasite' on world economy

Russian Prime Minister Vladimir Putin on Monday accused the United States of acting as a "parasite" on the world economy by accumulating massive debts that threaten the global financial system.

"The country is living in debt. It is not living within its means, shifting the weight of responsibility on other countries and in a way acting as a parasite," Putin told a group of pro-Kremlin youth in central Russia.

US President Barack Obama on Sunday announced an 11th hour debt deal that will allow the country to avoid its first default in history while pushing ahead with a painful austerity plan designed to slash Washington's swelling debt.

The deal was met initially with relief on global financial markets and saw Moscow's two stock exchanges open the day up about two percent but investors then began to have doubts about the plan and gains were reversed sharply.

Putin has repeatedly criticised the United States' recent foreign exchange policy and its propensity to cover budget deficits with treasury bills and bonds held by sovereign clients such as China and Russia.

The value of that paper will shrink if US debt is downgraded by a major Western ratings agency and Putin was insistent Monday that the world should be seeking new reserve currencies for trade and savings.

"If the US encounters a systemic malfunction, this affects everyone," Putin told the Seliger camp gathering. "There should be other reserve currencies."

Putin added that the debt agreement announced by Obama "was not that great overall because it simply delayed the adoption of a more systemic solution."

Russia's de facto leader was attending the pro-Kremlin lakeside youth camp as part of a continuing series of public appearances that are being closely watched by political observers as December parliamentary elections approach.

Putin's United Russia party is hoping for a strong performance in December that can catapult their leader into presidential elections scheduled for March.

The current Kremlin chief Dmitry Medvedev has found strong backing in some Washington circles and who has worked more closely on a "reset" in relations with Obama's team.

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