Clinton defends Asian bailout

Clinton defends Asian bailout

WASHINGTON (AP): Seeking to answer growing criticism of multibillion-dollar bailouts of reeling Asian economies, the Clinton administration warned of serious threats to the U.S. economy and the global financial system if the crisis is not contained.

Both President Bill Clinton and his chief economic spokesman, U.S. Treasury Secretary Robert Rubin, sought to counter complaints in Congress that the more than US$100 billion in emergency funds for South Korea, Indonesia and Thailand amount to multibillion-dollar bailouts for wealthy banks.

In a televised PBS interview, the president said the United States had a "plain, brutal, short-term economic interest" in helping support Asian currencies so that cheap Asian goods didn't push U.S. products out of world markets.

Rubin, in a separate speech, said the administration plans this spring to convene an international meeting of finance ministers to search for ways to repair the world's financial system.

He put Japan on the spot, saying the world's second-largest economy had an "especially crucial role to play" to resolve the crisis by jump-starting its own economy. He welcomed recent pledges by Chinese officials that they will not devalue their own currency.

Rubin's remarks came on a day when separate reports showed that the Asian crisis has yet to affect America's trade deficit but is beginning to impact on the well-being of manufacturing firms.

The Federal Reserve, in its latest survey of regional U.S. economic conditions, said Wednesday the Asian crisis is being felt in most parts of the country.

"Manufacturers and agricultural firms report weaker exports to Asia, and there is some evidence of increased competition from Asian products in U.S. markets," the central bank said. The economic status report will be used when Fed policy makers next meet on Feb. 3-4 to set interest rates.

There is a widespread belief that the central bank will leave interest rates intact, believing that the dampening effects of the Asian crisis will be enough without rate increases to slow U.S. growth and keep inflation in check.