WASHINGTON (Dow Jones)--Lawrence Summers, a top adviser to U.S. President Barack Obama, said Friday that countries accounting for a "very substantial majority of the world economy" probably have room for fiscal stimulus.
"As a general matter, I think there is, looking around the world, significant scope for fiscal expansion," the director of the White House National Economic Council said in answering questions after a speech at the Brookings Institution.
Summers declined to name the countries, but Treasury Secretary Timothy Geithner is expected to urge his counterparts at the Group of 20 meeting this weekend to increase their efforts to spur demand.
That push has been met with resistance, especially among European governments that have signaled they don't plan to come up with more stimulus measures.
In his speech, Summers said the administration will be pushing the G20 to adopt pro-growth measures in addition to fixing the regulatory system.
"Priorities will include spurring demand around the world and assuring the adequacy of funding for emerging markets," he said.
The former Treasury secretary downplayed concerns about the increase in the U.S. debt load to finance its policies to restore growth and financial stability.
When asked about comments by Chinese Premier Wen Jiabao about the outlook for U.S. government debt, Summers said Obama's budget proposal shows a commitment to returning to a "sustainable" fiscal policy once the economic expansion starts. But he said it's necessary to "prime the pump" to get out of the "vicious cycle."
While acknowledging that there is a danger if deficits continue to rise after the crisis, Summers argued that the current policy is ultimately more fiscally responsible than austerity measures. With the current market sentiment, he said, the central variable is restoring confidence and generating a sustainable recovery.
"If we were to put that at risk in the name of some generalized concern about austerity, I think we would be doing the wrong thing by the economy, and ironically, we would even be doing the wrong thing by markets," he said.
Summers touted what he called "the boldest economic program to promote recovery and expansion in two generations."
While expressing confidence that the administration's three-pronged plan to boost growth, revive financial markets and help homeowners will work, he acknowledged that the timing of a turnaround is unclear.
"No one can know just when its positive effects will be fully felt. No one can predict when this crisis will be resolved," he said. "But in resolution, I am confident there is enormous opportunity for both Americans and for the United States of America."
He pointed to improved consumer spending and narrowing credit spreads as signs that the policies are already bearing fruit.
The economy is suffering from a "rarer kind of recession" caused by the "spontaneous correction of financial excesses," said Summers, warning that the crisis won't be solved quickly.
But he also said the correction presents an opportunity to restore the economy to its potential, noting that, adjusted for inflation, the Dow Jones Industrial Average has fallen to a level last seen in 1966.
"For policy makers, it suggests the magnitude of the gains from restoring sustained economic growth," he said, saying the market could be regarded as "the sale of the century."
Answering a question after the speech, Summers said it's a good time to invest for businesses with sound long-term strategies "because in a real sense, there are a very large number of things that are on sale today," citing a lower cost of construction as one example.
But he said that other engines of growth are needed to ensure long-term growth in the absence of the asset bubbles of the past, requiring efforts to boost exports and invest in health care, energy and education.
Summers also signaled support for passing a bill that would make it easier for unions to organize - the Employee Free Choice Act that was introduced in the Senate this week.
When asked whether a union-organizing bill is a good idea during a recession, Summers said a sound economic expansion requires that benefits are broadly shared, and a healthy trade union movement is part of that. Arguing that labor laws have tilted against unions for many years, he said "an attempt to redress that balance seems to me something that is appropriate at such a time."
Summers also defended Geithner, saying he has handled the crisis in a "difficult and courageous way" by creating a plan that recognizes the complexity of the problem. Taking a swipe at the Bush Administration, he said the easy route would be to issue plans that have the "illusion of specificity and sense of certainty about what the future would bring."
He said the wisdom of Geithner's approach will be clear once the bank stress tests are completed and the measures to restart credit markets start producing results.
On overhauling the global financial system, Summers said the U.S. "must lead a leveling up of regulatory standards, not as has happened all too often in the recent past, trying to win a race to the bottom."
Geithner plans to lay out more detailed regulatory proposals in coming weeks, but Summers mentioned some broad principles, including that "no substantially interconnected institution or market on which the system depends should be free from rigorous public scrutiny."
In addition, capital and liquidity requirements should focus on protecting the system during crises, improper risk-taking should be discouraged, and regulatory agencies shouldn't compete, he said.
-By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ng1w6r1HE0kclAhDCqibiA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
March 13, 2009 14:46 ET (18:46 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 02 46 PM EDT 03-13-09
Friday, March 13, 2009
After U.S.A just legislated over $1.2 Trillion in spending, Summers urges other nations to dilute their currencies; backs EFCA too!
Even though the market is performing a technical head fake today, we'd be remiss not to remind of the eery Friday the 13th news. POTC doesn't mind a little govt spending in times of great crisis, yet we believe the recent amounts reveal more weakness than strength. And when met with anti-growth fiscal/tax policies, perhaps Larry needs to revisit his Econ 101 studies before asking world leaders, who have already chosen to walk down more socialistic paths, to grow their govt even more? We see this development as the first step in a process of rising doubt about the mammoth growth in governemnt & greenbacks under Obama. 60% of respondents in our poll felt Obama is failing capitalism, the free market system that did more good than ANY other model ever. Thank you for participating in our poll. Also, please notice Summers back EFCA towards the end of piece.
WASHINGTON (Dow Jones)--Lawrence Summers, a top adviser to U.S. President Barack Obama, said Friday that countries accounting for a "very substantial majority of the world economy" probably have room for fiscal stimulus.
"As a general matter, I think there is, looking around the world, significant scope for fiscal expansion," the director of the White House National Economic Council said in answering questions after a speech at the Brookings Institution.
Summers declined to name the countries, but Treasury Secretary Timothy Geithner is expected to urge his counterparts at the Group of 20 meeting this weekend to increase their efforts to spur demand.
That push has been met with resistance, especially among European governments that have signaled they don't plan to come up with more stimulus measures.
In his speech, Summers said the administration will be pushing the G20 to adopt pro-growth measures in addition to fixing the regulatory system.
"Priorities will include spurring demand around the world and assuring the adequacy of funding for emerging markets," he said.
The former Treasury secretary downplayed concerns about the increase in the U.S. debt load to finance its policies to restore growth and financial stability.
When asked about comments by Chinese Premier Wen Jiabao about the outlook for U.S. government debt, Summers said Obama's budget proposal shows a commitment to returning to a "sustainable" fiscal policy once the economic expansion starts. But he said it's necessary to "prime the pump" to get out of the "vicious cycle."
While acknowledging that there is a danger if deficits continue to rise after the crisis, Summers argued that the current policy is ultimately more fiscally responsible than austerity measures. With the current market sentiment, he said, the central variable is restoring confidence and generating a sustainable recovery.
"If we were to put that at risk in the name of some generalized concern about austerity, I think we would be doing the wrong thing by the economy, and ironically, we would even be doing the wrong thing by markets," he said.
Summers touted what he called "the boldest economic program to promote recovery and expansion in two generations."
While expressing confidence that the administration's three-pronged plan to boost growth, revive financial markets and help homeowners will work, he acknowledged that the timing of a turnaround is unclear.
"No one can know just when its positive effects will be fully felt. No one can predict when this crisis will be resolved," he said. "But in resolution, I am confident there is enormous opportunity for both Americans and for the United States of America."
He pointed to improved consumer spending and narrowing credit spreads as signs that the policies are already bearing fruit.
The economy is suffering from a "rarer kind of recession" caused by the "spontaneous correction of financial excesses," said Summers, warning that the crisis won't be solved quickly.
But he also said the correction presents an opportunity to restore the economy to its potential, noting that, adjusted for inflation, the Dow Jones Industrial Average has fallen to a level last seen in 1966.
"For policy makers, it suggests the magnitude of the gains from restoring sustained economic growth," he said, saying the market could be regarded as "the sale of the century."
Answering a question after the speech, Summers said it's a good time to invest for businesses with sound long-term strategies "because in a real sense, there are a very large number of things that are on sale today," citing a lower cost of construction as one example.
But he said that other engines of growth are needed to ensure long-term growth in the absence of the asset bubbles of the past, requiring efforts to boost exports and invest in health care, energy and education.
Summers also signaled support for passing a bill that would make it easier for unions to organize - the Employee Free Choice Act that was introduced in the Senate this week.
When asked whether a union-organizing bill is a good idea during a recession, Summers said a sound economic expansion requires that benefits are broadly shared, and a healthy trade union movement is part of that. Arguing that labor laws have tilted against unions for many years, he said "an attempt to redress that balance seems to me something that is appropriate at such a time."
Summers also defended Geithner, saying he has handled the crisis in a "difficult and courageous way" by creating a plan that recognizes the complexity of the problem. Taking a swipe at the Bush Administration, he said the easy route would be to issue plans that have the "illusion of specificity and sense of certainty about what the future would bring."
He said the wisdom of Geithner's approach will be clear once the bank stress tests are completed and the measures to restart credit markets start producing results.
On overhauling the global financial system, Summers said the U.S. "must lead a leveling up of regulatory standards, not as has happened all too often in the recent past, trying to win a race to the bottom."
Geithner plans to lay out more detailed regulatory proposals in coming weeks, but Summers mentioned some broad principles, including that "no substantially interconnected institution or market on which the system depends should be free from rigorous public scrutiny."
In addition, capital and liquidity requirements should focus on protecting the system during crises, improper risk-taking should be discouraged, and regulatory agencies shouldn't compete, he said.
-By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ng1w6r1HE0kclAhDCqibiA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
March 13, 2009 14:46 ET (18:46 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 02 46 PM EDT 03-13-09
WASHINGTON (Dow Jones)--Lawrence Summers, a top adviser to U.S. President Barack Obama, said Friday that countries accounting for a "very substantial majority of the world economy" probably have room for fiscal stimulus.
"As a general matter, I think there is, looking around the world, significant scope for fiscal expansion," the director of the White House National Economic Council said in answering questions after a speech at the Brookings Institution.
Summers declined to name the countries, but Treasury Secretary Timothy Geithner is expected to urge his counterparts at the Group of 20 meeting this weekend to increase their efforts to spur demand.
That push has been met with resistance, especially among European governments that have signaled they don't plan to come up with more stimulus measures.
In his speech, Summers said the administration will be pushing the G20 to adopt pro-growth measures in addition to fixing the regulatory system.
"Priorities will include spurring demand around the world and assuring the adequacy of funding for emerging markets," he said.
The former Treasury secretary downplayed concerns about the increase in the U.S. debt load to finance its policies to restore growth and financial stability.
When asked about comments by Chinese Premier Wen Jiabao about the outlook for U.S. government debt, Summers said Obama's budget proposal shows a commitment to returning to a "sustainable" fiscal policy once the economic expansion starts. But he said it's necessary to "prime the pump" to get out of the "vicious cycle."
While acknowledging that there is a danger if deficits continue to rise after the crisis, Summers argued that the current policy is ultimately more fiscally responsible than austerity measures. With the current market sentiment, he said, the central variable is restoring confidence and generating a sustainable recovery.
"If we were to put that at risk in the name of some generalized concern about austerity, I think we would be doing the wrong thing by the economy, and ironically, we would even be doing the wrong thing by markets," he said.
Summers touted what he called "the boldest economic program to promote recovery and expansion in two generations."
While expressing confidence that the administration's three-pronged plan to boost growth, revive financial markets and help homeowners will work, he acknowledged that the timing of a turnaround is unclear.
"No one can know just when its positive effects will be fully felt. No one can predict when this crisis will be resolved," he said. "But in resolution, I am confident there is enormous opportunity for both Americans and for the United States of America."
He pointed to improved consumer spending and narrowing credit spreads as signs that the policies are already bearing fruit.
The economy is suffering from a "rarer kind of recession" caused by the "spontaneous correction of financial excesses," said Summers, warning that the crisis won't be solved quickly.
But he also said the correction presents an opportunity to restore the economy to its potential, noting that, adjusted for inflation, the Dow Jones Industrial Average has fallen to a level last seen in 1966.
"For policy makers, it suggests the magnitude of the gains from restoring sustained economic growth," he said, saying the market could be regarded as "the sale of the century."
Answering a question after the speech, Summers said it's a good time to invest for businesses with sound long-term strategies "because in a real sense, there are a very large number of things that are on sale today," citing a lower cost of construction as one example.
But he said that other engines of growth are needed to ensure long-term growth in the absence of the asset bubbles of the past, requiring efforts to boost exports and invest in health care, energy and education.
Summers also signaled support for passing a bill that would make it easier for unions to organize - the Employee Free Choice Act that was introduced in the Senate this week.
When asked whether a union-organizing bill is a good idea during a recession, Summers said a sound economic expansion requires that benefits are broadly shared, and a healthy trade union movement is part of that. Arguing that labor laws have tilted against unions for many years, he said "an attempt to redress that balance seems to me something that is appropriate at such a time."
Summers also defended Geithner, saying he has handled the crisis in a "difficult and courageous way" by creating a plan that recognizes the complexity of the problem. Taking a swipe at the Bush Administration, he said the easy route would be to issue plans that have the "illusion of specificity and sense of certainty about what the future would bring."
He said the wisdom of Geithner's approach will be clear once the bank stress tests are completed and the measures to restart credit markets start producing results.
On overhauling the global financial system, Summers said the U.S. "must lead a leveling up of regulatory standards, not as has happened all too often in the recent past, trying to win a race to the bottom."
Geithner plans to lay out more detailed regulatory proposals in coming weeks, but Summers mentioned some broad principles, including that "no substantially interconnected institution or market on which the system depends should be free from rigorous public scrutiny."
In addition, capital and liquidity requirements should focus on protecting the system during crises, improper risk-taking should be discouraged, and regulatory agencies shouldn't compete, he said.
-By Tom Barkley, Dow Jones Newswires; 202-862-9275; tom.barkley@dowjones.com
Click here to go to Dow Jones NewsPlus, a web front page of today's most important business and market news, analysis and commentary: http://www.djnewsplus.com/access/al?rnd=ng1w6r1HE0kclAhDCqibiA%3D%3D. You can use this link on the day this article is published and the following day.
(END) Dow Jones Newswires
March 13, 2009 14:46 ET (18:46 GMT)
Copyright (c) 2009 Dow Jones & Company, Inc.- - 02 46 PM EDT 03-13-09
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1 comment:
Why are you guys so wrong? I think its because you are watching CNBC. Just shut the tv off and jump in boys, hell of a Obama rally you are missing.
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