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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: nextrade! who wrote (14035)	9/28/2003 9:12:01 PM
From: nextrade!	Read Replies (2) \| Respond to of 306849

Irresponsible and irrational; US Treasury's Fisher takes long-term economic view Sun September 28, 2003 11:43 AM ET reuters.com By Jonathan Nicholson WASHINGTON, Sept 28 (Reuters) - Peter Fisher, the U.S. Treasury Department's fiscal guru, is unapologetic about finding a way to finance what is expected to be the biggest annual flood of government red ink in history. In fact, he's proud. "Why would I take offense? We've managed the biggest swing in borrowing in the history of the Republic and done a pretty good job of it. That's one of my proudest accomplishments," Fisher said during a wide-ranging round-table interview with a group of reporters last week. His resignation is effective in early October as under secretary for domestic finance, the Treasury's main link with Wall Street and financial markets. He told reporters he had "no idea" what he would do next. Fisher, once admired on Wall Street for his cut-to-the-chase braininess, an image sullied slightly by what some say were market policy missteps, struck a contrarian note ahead of his pending departure. "MIDDLE-OF-THE-ROAD" In October, the Bush administration is set to announce a record-breaking number for the annual shortfall between what the government took in in taxes and fees and what it spent. That number will likely be close to $400 billion, well above the previous record of $290 billion in 1992 and a sharp turnaround from a surplus of $236 billion in 2000. The Bush administration says, as a proportion to the size of the economy, the deficits are not as alarming as they look. Asked to explain the shortfall to a typical "man on the street," Fisher said, "If you look at it in the short run, 34, 35 percent marketable debt-to-(gross domestic product) is a middle-of-the-road number for an industrial country. I admit the man on the street may not be very interested in that.." Fisher said the focus should be less on deficits or surpluses of hundreds of billions in a government that takes in almost $2 trillion annually and instead on the tangled web of government accounting, which often takes little note of vast future liabilities. Last week, Fisher sat on the National Press Club dais as David Walker, U.S. comptroller general, gave a speech where he said U.S. deficits were "large, structural and recurring." Fisher said he disagreed with Walker's emphasis, but he agreed with some of his proposals. "The structural deficit, in my view, comes from our accounting failure, running this government on cash accounting," he said. "RELATIVE CONFIDENCE" Between the Sept. 11, 2001, attacks and the fumbled announcement of the suspension of 30-year bond issuance -- a move that Fisher admitted he wished had been "more seamless" --Fisher was in the hot seat several times in his tenure. Including his days at the Federal Reserve Bank of New York, he's seen many market crises, but he said they all shared one thing in common: confidence. "Investment is about relative confidence in the future. It's always about that," he said. "What's more impressive, from where I sit, is seeing that, whether it's about 9/11 or Long-Term Capital, it's about people having confidence in one another." While markets are resilient, he said they can also, at times, be very fragile. One of those times was in the aftermath of the Sept. 11 attacks two years ago. With the epicenter of global finance in a shambles and stock exchanges closed for days, Fisher helped reassemble the pieces, a task for which he's gotten enormous credit. Fisher himself painted a more modest picture. "It was an extraordinary accomplishment of hundreds of people to re-establish confidence in those markets ... It was wonderful to be a part of that."