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Tuesday, Sep. 15, 1998
Clinton urges spurs to global growth
G-7 officials agree recession is main threat
By MARTIN CRUTSINGER
Associated PressWASHINGTON - President Clinton, struggling to regain his footing from the Monica Lewinsky affair, pledged Monday to work with America's allies to deal with the ``biggest financial challenge facing the world in a half-century.''
The president said that with one-fourth of the globe currently in recession, ``the balance of risks has now shifted'' from inflation, the economic bugaboo of the past three decades, to the need to contain a spreading economic crisis coming out of Asia.
``The industrial world's chief priority today plainly is to spur growth,'' Clinton said in an economic address to the Council on Foreign Relations in New York.
In an unusual move to coordinate a policy message, finance ministers and central bank presidents of the world's seven richest countries released a joint statement within an hour of the conclusion of Clinton's speech endorsing his major themes.
The Group of Seven statement specifically said that ``the balance of risks in the world economy had shifted'' and the major countries would need to work together to deal with a financial crisis that began a year ago in Thailand and has now spread to Russia and is threatening to engulf South America.
Clinton's comments increased hopes in U.S. financial markets that Federal Reserve Chairman Alan Greenspan will soon reduce U.S. interest rates. Greenspan raised that possibility himself on Sept. 4 when he said it was implausible to believe that the United States could remain an ``ocean of prosperity'' against a backdrop of growing global recessions.
The Dow Jones industrial average, which was rebounding strongly even before the president spoke, finished the day up 149.85 at 7,945.35, slightly above where it began the year.
While fueling interest-cut hopes in the United States, Clinton's remarks and the G-7 statement don't make a coordinated round of rate reductions a certainty, private economists insisted.
They saw Clinton's speech as an effort to demonstrate that the Lewinsky matter has not diverted his attention or the efforts of his economic policy team away from the global financial crisis. The G-7 statement, which was produced after a series of weekend phone calls led by aides to Treasury Secretary Robert Rubin, was seen as an effort to respond to criticism that there has been a global leadership vacuum.
``It is very difficult at this moment with Clinton's presidential powers diminished to really assert the kind of global leadership that is needed,'' said David Jones, chief economist at Aubrey G. Lanston & Co. in New York. ``This is mostly rhetoric. I couldn't see in the G-7 statement any action.''
Treasury Secretary Robert Rubin, who accompanied Clinton his trip to New York, insisted that there has been no change in the administration's long-held stance that the Fed is an independent body and it will not attempt to jawbone the central bank into cutting interest rates.
And a senior administration official who briefed reporters cautioned against expecting any type of coordinated global rate cuts to emerge based on the G-7 statement.
Last month, the Asian crisis spread to Russia and last week investors in Latin America began to panic and pull money out, fearing several Latin American nations would be the next victims.
Clinton pledged to ``respond immediately and with financial force, if necessary'' to any deepening crisis in Latin America by tapping a $15 billion emergency bailout fund administered by the International Monetary Fund. He attacked Congress for failing to approve his request for $18 billion to replenish IMF resources.
But House Republican leader Dick Armey was unmoved, saying ``instead of repairing his credibility, the president dug himself into a deeper hole. All the evidence contradicts his statements that the IMF supports reform and fights contagion.''
The president did announce that he had asked Rubin and Greenspan to convene discussions with their counterparts in rich and developing countries in the next 30 days over ways to reform the global financial architecture to better deal with future crises, but officials said concrete proposals are not expected until next year. The initial meeting will occur next month in Washington.
Clinton did not mention his current troubles in the Monica Lewinsky matter but he stressed his administration was focused on the deteriorating world economic situation.
``Our future prosperity depends upon whether we can work with others to restore confidence, manage change, stabilize the financial system and spur robust global growth,'' the president said.Post your comments about local news eventsFront Page || Main Index || News || Business || Texas || South Texas Outdoors || Birdwatching || Sports || Entertainment || Selena || Education || South Texas Attractions || World Wide Web