To All - Repost: IIE'S BERGSTEN: JAPAN HUGE PART OF ASIA FINANCIAL WOES
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Futures World News - January 14, 1998 11:33
ECONOMY FINANCIAL CURRENCY STOCK TREASURY V%FWN P%FWN
Washington-Jan. 14-FWN--ECONOMIC AND FINANCIAL market woes in Asia will likely continue in coming months with additional bankruptcies on the horizon, according to Fred Bergsten, director at the Institute for International Economics.
Bergsten, during an interview on CNBC, also added that a sluggish and closed Japanese economy is an albatross hanging over its Asian neighbors.
"I continue to believe that Japan is a huge part of the problem and not of the solution," Bergsten said. "That's why it will take many months before the region gets back on track. Until they get rolling forward, it will be hard for the others. They may even make it worse."
The Japanese government, Bergsten said, needs to use available financial restructuring money in the right way. They need to allow weaker institutions to fail, he said.
According to Bergsten, as Asia's economies slow sharply, there will be additional bankruptcies. It is "vastly premature to think we're out of the problem," although it is conceivable that Asia is past the worst point in its crisis, Bergsten said.
"We may have hit the lows, but we're certainly not out of the woods," he said.
One of the positive factors, he sees, is the likelihood Hong Kong will be able to maintain its peg to the U.S. dollar. The risks, Bergsten said, are very small that either Hong Kong or China will devalue their currencies.
Meanwhile, a report surfaced today that the United States is working with other nations toward a meeting of the Group of Seven (G-7) and Russia to find ways of strengthening the international financial institution.
One government source who refused to be identified said the meeting will likely take place in the next month or two and would also include nations from outside the G-7.
In late February, the G-7 finance ministers convene in Birmingham, England. It is not clear whether the Clinton Administration is planning on expanding that meeting or holding a separate one.
President Clinton, according to the report, will discuss the current Asian economic and financial market crisis when he delivers his State of the Union address Jan. 27. He will reportedly ask Congress to approve additional funding for the International Monetary Fund (IMF), which is working to restore stability to the Asian region.
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