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Journalism of Courage
Washington, April 27: After months and months of unrelenting pressure on Europe and Japan to do more to keep the world economy humming along, the United States said on Monday it could finally detect some light at the end of the tunnel.
Speaking after a day of meetings with his counterparts from the Group of Seven top industrial nations, Treasury Secretary Robert Rubin said he felt confident that both Japan and Europe, whose growth rates are lagging far behind the booming US economy, seemed to have gotten the message.
"I did come away with the feeling… that there was a real focus… on the softness of projected growth and the need to take action to restore growth," Rubin told a news briefing.
Rubin’s unusually upbeat assessment came after the G7 – Britain, Canada, France, Germany, Italy, Japan and the United States – issued a statement that urged both Japan and Europe to finally get serious about dusting off their growth engines.
Reflecting America’s growing economic dominance within the G7, theeight-page statement largely echoed previous statements by Rubin and other US officials on the need for other major nations to emulate the US growth miracle by stimulating domestic demand and cutting down on excessive regulation.
But when asked whether the group offered to give Japan a helping hand in its more recent efforts to curb the rise of its yen currency – which Tokyo fears could undermine its chances for recovery – Rubin said Japan did not ask for any help.
"They did not ask for our assistance in anything they might or might not be doing," Rubin said. And when asked about the volatility of the yen against other key currencies, he replied "that’s not an issue we spend much time thinking about".
Rubin has repeatedly insisted that only sound economic fundamentals can help stabilise currency values – yet another US mantra that has slowly found its way into G7 statements. The United States is facing a record trade deficit this year amid booming domestic growth that has raised demand for imports toever-higher levels. Europe and Japan, meanwhile, have seen their trade surpluses grow, prompting repeated US warnings not to export their way out of a slowdown.
Rubin said the mounting US trade imbalance "though sustainable (economically) for a substantial period of time," was not sustainable indefinitely. The US administration fears that continued record trade deficits will fuel protectionist pressures in Congress which is already considering proposals that would limit steel imports.
European officials had hoped that a cut in key European interest rates earlier this month would go at least some way toward placating mounting U.S. Irritation with slowing growth rates on the old continent. Similarly, Japanese officials had hinted at their most recent economic stimulus programmes as evidence that they are doing all they can to climb out of a deep slump.
But for Washington, those measures clearly are not enough yet, and Rubin suggested the cupboard of available economic measures in both economic blocs wasfar from empty. "What needs to be in place are programmes that continue effective fiscal stimulus until growth is in place," he said, referring to Japan. Japanese officials said there had not been any talk of the need for a supplemental budget for the current fiscal year when Rubin met Japanese Finance Minister Kiichi Miyazawa for a private session earlier on Monday.
As for Europe, Rubin reiterated that long overdue structural reforms had to go hand-in-hand with whatever macroeconomic steps were being taken to boost sluggish demand.
