White House, Bush Try to Calm World Market Jitters : Both Stress Continuity, Stability
The White House and President-elect George Bush joined in efforts today to quell post-election nervousness in the financial markets, reaffirming the U.S. commitment to coordination of economic policy with its allies.
“The United States remains committed to exchange market stability,” said White House spokesman Marlin Fitzwater. “The key to that stability is the economic policy coordination process, including cooperation in exchange markets.”
In Delray Beach, Fla., Bush said he will continue President Reagan’s economic policies, including the commitment to a stable dollar.
Standing on a beach where he has been vacationing, Bush told reporters that his Administration will continue “the policy in effect,” which he said is built around coordination among the United States and its main trading partners.
Pledges of Stability
Backing up pledges of stability with deeds, the Federal Reserve stepped into the foreign exchange markets today to support the dollar, according to New York dealers. The U.S. currency advanced to 1.7445 West German marks by noon from 1.7375 at Friday’s close and to 123.40 Japanese yen from 122.85.
Responding to drops last week in the stock market and the value of the dollar, Fitzwater suggested that those developments were more functions of manipulation and speculation than concern about the election of Bush.
Fitzwater said a “steady downward trend” in the trade deficit and continued efforts to reduce huge federal budget deficits suggest that “from a policy standpoint, I see no reason for market concern at this point.”
Fitzwater said of foreign-exchange traders, “I urge them to be calm, be cautious and be kind.”
Talk of Trade Deficit
The instability last week was prompted by hints that advisers to Bush want to see the dollar drop even lower to make American goods cheaper abroad and thereby help reduce the trade deficit.
On Sunday, Bush transition co-director Craig Fuller disavowed comments to that effect from Martin Feldstein, who has served as an economic adviser to President Reagan and Bush, and said there will be no immediate change in U.S. policy on the dollar.
Fitzwater chimed in today to reinforce that message, telling reporters, “The Administration policy has not changed, and there have been no conflicting statements by Administration officials on this matter.”
Bush’s comments, and a barrage of similar remarks by other American and foreign officials, stemmed the heavy selling that hit the dollar and stocks after last Tuesday’s election.
Disagreement Persists
But they failed to dispel fears that the new Administration and the Democratic-controlled Congress will not be able to agree on ways to trim the budget deficit.
Asked about the dollar, Bush said: “The policy that is in effect is the Administration policy. It is built around policy coordination and exchange market stability.”
Bush, who said he will address the twin budget and trade deficits early in his presidency, declined to discuss future appointments to his Administration, including reports that Treasury Secretary Nicholas F. Brady will remain in his post.
“I don’t feel any great pressure” to announce a Cabinet, Bush said, noting that he was elected less than a week ago. He takes office Jan. 20.
Bush said he will begin serious consideration of his Cabinet appointments after his return to Washington on Tuesday.
Foreign officials also tried to placate the markets.
Japanese central bank governor Satoshi Sumita said major nations will continue to cooperate closely to deal with volatile currency movements. In New York, a spokesman for visiting West German Chancellor Helmut Kohl said Bonn is not interested in seeing the dollar go down.
