China paper assails U.S. rate cut as too small
BEIJING, Oct 5 (Reuters) - China's leading newspaper on Monday
criticised as inadequate a U.S. interest rate cut last week, saying it
was ''like trying to douse a blazing cartload of kindling with a cup of
water.''
The People's Daily urged deeper interest rate cuts and called on
Washington to approve $18 billion of additional funding urgently needed
by the International Monetary Fund.
Last week the U.S. Federal Reserve cut a key short-term interest rate,
the federal funds rate, by a quarter of a percentage point to 5.25
percent.
''The U.S. interest rate cut can help reduce the currency pressure on
developing countries and ease the spreading international financial
crisis,'' the Communist Party mouthpiece said in a signed commentary.
''It is a wise action, but it is too small,'' the commentary said.
It said the rate cut was also aimed at stimulating the domestic economy.
''The U.S. Federal Reserve this time intends to 'kill two birds with one
stone','' it said.
''But it is like trying to put out a blazing cartload of kindling with a
cup of water.''
The commentary said the U.S. economy had been overshadowed by a plunge
in the earnings of its corporate giants with large exposure to Asian
markets, and by a rising trade deficit.
The Asian crisis was spreading towards Latin America, and Washington
should act further to stop the contagion, it said.
''Doubtless, the United States needs to further lower its interest rates
and adopt other related measures, such as fulfilling its committment to
increase its capital share in the International Monetary Fund by $18
billion as soon as possible, to effectively ease the international
financial crisis,'' the commentary said.
''Other developed countries should also actively make their own
contribution,'' it said.
The Financial News daily, published by the central bank, lashed out at
what it called ''immoral'' U.S.-based hedge funds which had inflicted
serious damage on Asian economies.
Citing the near collapse of the U.S. fund American Long Term Capital
Management, it called on U.S. financial authorities to tighten
supervision over the funds.
''The American hedge funds have only themselves to blame for their heavy
losses,'' a commentary said. "This should make the U.S. financial
regulatory authorities ponder.
''Undisputable facts demonstrate that financial disasters in other
countries will eventually produce the domino effect in the United
States,'' the newspaper said.
''U.S. financial authorities cannot guarantee their own security unless
they tighten their grip on excessive speculative activities.''
China has been insulated from much of the regional financial turmoil
because its capital markets are largely closed.
It has chipped in to international bailouts for Asian economies and has
boosted its international standing by pledging not to devalue its
currency, the yuan.
Regards,
R.T |
