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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: James F. Hopkins who wrote (22161)	8/5/1999 12:26:00 AM
From: Les H	Read Replies (2) \| Respond to of 99985

TEXT-Lawrence Summers interview with BBC LONDON, Aug 5 (Reuters) - Following is the full text of U.S. Treasury Secretary Lawrence Summers' responses in an interview with BBC Television on Wednesday. The questions have been paraphrased. Q: Is the U.S. bubble about to burst? SUMMERS: I think we have a lot to feel good about in the U.S. economy. You know we have had a strategy based on the idea of bringing down the budget deficit, starting to get the national debt downward, going from an era of budget deficit to very substantial surplus. We have promoted the kind of productivity-enhancing investments in information technology through talking about work to open markets we have concentrated on educating our people. Our strategy has been a strategy of not focusing on what happens in financial markets, but instead working one step at a time to build strength of the real economy. There are always going to be some movements up and down but I feel confident that momentum of economic expansion should be maintained going forward. Q: Are alarm bells ringing on the U.S. economy? SUMMERS: Well you know, you say circumstances like these but we really had a sea change since 1990 in our country. At that point we had deficits of several hundred million dollars that were growing out as far as the eye could see. Today we have got a budget surplus, we have got substantial reductions in the national debt, the prospect we will pay off our whole national debt some time in the next 15 years. That gives us a very different kind of flexibility and a very different kind of economic situation than we had in our earlier stage and so the momentum of this expansion should continue. Q: So we should all go home tonight believing it (U.S. economy) is a miracle? SUMMERS: Well I don't think it is useful to talk about miracles. I think that our economic strength is built on hard work and fundamentals. It is built on what American workers are doing, what American businesses are doing, innovative, producing higher quality products, lower costs, taking advantage of information age opportunities, built on the kind of foundation we laid in Washington by moving to a period of budget surplus, built one step at a time. I dont think it's useful to think about miracles. I think its useful to think about what hard work by a lot of people, each working to do their part, can accomplish. Q: Is the obsession with the U.S. stock market a worry, what would happen if people pulled their money out? SUMMERS: No one can predict what is going to happen in markets and certainly it's not my job as Treasury Secretary to try to make predictions about markets. The strategy that we've had from the beginning has been one of focusing on the real economy and believing that if we build a strong real economy, we concentrate on the economic fundamentals of creating capacity, expanding investment, lets the economy grow while at the same time putting downwards pressure on inflation, while at the same time promoting increases in productivity. If we concentrate on those kinds of fundamentals, what happens in markets will work out out. I think that's the right approach to economic policy and you make a serious mistake if you try to manage the markets on a weekly or monthly basis. Question on currencies and yen. SUMMERS: Our policy on currencies has been constant for years, a strong dollar is very much in the interest of the United States. And I think I'll leave it at that. We obviously watch what happens in markets and in touch with our G7 partners but that is as it has always been and there has been no change in our policy. Q: Do you take an interest in euro, should Britain join? SUMMERS: Well that's a choice for Britain to make and it's obviously a very consequential choice in economic and financial terms and I think the British government has laid out an approach to working that question. In general as important as the euro is for financial markets, for the financial system, my view would be that Europe's prospects for enjoying a period of sustained expansion really depend upon its ability to harness the creativity and energy of European workers, European businesses by allowing market forces to operate, by creating the kind of flexibility in which entrepreneurial opportunities can be pursued and that's probably most important for the actual opportunities open to people in Europe.