What's with the Morgy_Dog handle? Threw me for a minute there : - ).................
US TSY'S RUBIN: JAPAN MUST TAKE 'SWIFT, STRONG FISCAL ACTION'
By Kevin Kastner
ÿÿÿÿÿWASHINGTON (MktNews) - Japan must take "swift, strong fiscal action" to stimulate its economy and resume growth for the sake of not only itself, not only Asia, but also for the entire world economy, U.S. Treasury Secretary Robert Rubin said Wednesday.
ÿÿÿÿÿIn testimony before the House Banking Committee, Rubin repeated his warnings that Japan is an integral part of the Asian economy and that without recovery in that country, Asia's recovery is made much more difficult. He departed from his prepared remarks in only minor ways.
ÿÿÿÿÿ"We and the rest of the world have worked together to discuss these matters with Japan. Just as the world said to the United States in the late 1980s and early 1990s that we need to get our fiscal house in orders because our budget deficits were harming the global economy, so has the rest of the world emphasized to Japan the need to address their problems," Rubin said.
ÿÿÿÿÿThe other sources of tension at the moment is Russia, which Rubin said made "significant progress" over the past few years to reform its economy, but "the Russian government this summer proved unable to adequately carry forward the necessary reforms" to finish the job. Rubin was referring to conditions placed on Russia as part of a lending agreement from the International Monetary Fund.
ÿÿÿÿÿ"We all knew there was a real risk that this wouldn't work, but it was a risk worth taking, given the enormous stakes to us," Rubin said.
ÿÿÿÿÿRussia has experienced political turmoil as their economy has been sliding downward, with the recent approval of a new prime minister the first sign of hope. Still, Rubin was cautious.
ÿÿÿÿÿ"Russia needs to build a political consensus behind policies of reform. When Russia is prepared to move down that path, the United States and the international community are prepared to support it," Rubin said.
ÿÿÿÿÿWhile many have accused the IMF of setting the bar of reform too high to be reached by many crisis-ravaged countries, Rubin said that judgements made by the IMF have been "largely sensible" with later circumstantial adjustments. The difficulties that these countries are experiencing are due to the underlying crisis, not IMF actions, Rubin said.
ÿÿÿÿÿSome countries that have received IMF aid, most notably Korea and Thailand have begun to see signs of stability returning in the form of appreciated currencies and low interest rates. "I have no doubt the situation over the past year would have been much worse without the work of the IMF," Rubin said.
ÿÿÿÿÿFor these reasons, Rubin repeated his call for funding of the IMF by industrialized countries, the U.S. included.
ÿÿÿÿÿ"While the fundamentals of the U.S. economy remain strong, we too are experiencing the effects of the crisis," Rubin said, noting falling exports and some falloff in corporate earnings. As the crisis spreads to Latin America, the U.S. faces additional impacts, Rubin said.
ÿÿÿÿÿ"At this juncture, resources at the IMF are a historic lows. Every day that Congress does not approve the President's request for IMF funding increases our vulnerability to a crisis and decreases confidence in global markets, which is critically important," Rubin said.
ÿÿÿÿÿRubin said that the IMF is important for three reasons. First, the IMF has the experience to assemble reform programs; second, it can obtain reforms that no individual nation could; and third is spreads the burden of aid across countries, rather than placing all of the burden--and the risk--of aid on one country.
ÿÿÿÿÿIn addition to insisting that other countries keep their economies intact, the U.S. must continue on a path of fiscal discipline if it expects to withstand contagion from faltering countries.
ÿÿÿÿÿ"In order to maintain the interdependent global economy, which has benefitted so many people around the globe, we need to find better preventative measures to reduce the frequency and severity of those problems and better ways to deal with those problems when they occur," Rubin said.
** Market News International Washington Bureau: (202) 371-2121 **
[TOPICS: MNSFED]
13:23 EDT 09/16
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