http://dailynews.yahoo.com/h/nm/19990813/bs/financial_summers_1.html Friday August 13 1:09 PM ET

Summers: Debt Spreads A Sign Of Strength

NEW YORK (Reuters) - U.S. Treasury Secretary Lawrence Summers sees signs of continuing U.S. economic expansion in widening corporate bond spreads, according to an interview in the latest issue of Business Week magazine.

``If you look at widening corporate spreads, they are a reflection of economic strength and a large issuance calendar, Summers told the magazine. ``They're a sign of a lot of borrowing for investments rather than a deterrent to investment.

Bond spreads are a premium paid to investors for taking on non-U.S. government debt. The third quarter of this year has seen a deluge of new debt in the corporate bond market as companies look to raise to capital earlier in the year.

Summers, who took over as Treasury Secretary from Robert Rubin, also reaffirmed the department's consistent policy that a strong U.S. dollar was in the best interest of the United States, in the face of the currency's recent swings.

``Our policy will be consistent because it's right for the American economy,'' he was quoted as saying in the interview.

Asked if he was worried about overheated real estate and buoyant U.S. financial markets, the Treasury secretary said momentum behind U.S. economic expansion -- its second longest in history -- should continue.

The benchmark Dow Jones Industrial Average rallied 117 points to 10,907 Friday after the latest economic report tempered fears about inflation.

Even as Wall Street worried about the possibility of higher U.S. interest rates to ward off inflation, Summers noted long-term rates still were substantially lower than they were in 1993, adding this was an ``investment-led'' expansion.

Other parts of the world, particularly Asia, have seen some signs of improvement but not all have recovered fully from last year's global financial turmoil, Summers said.

Japan, whose financial system remains burdened with bad loans, still had a great deal left to do, although the country had made progress setting aside money to address problems, Summers said.

``There are signs of improvement, but it's too early to reach conclusive judgements,'' he told Business Week. ``The focus still needs to be on achieving domestic, demand-led growth. Structural reforms to repair the financial system are of particular importance.''

While China faced structural reform challenges, it still had substantial reserves, a trade surplus and a variety of controls on capital flows, he said.

Other countries in Asia and Latin America that were successful in carrying out their commitments with the International Monetary Fund had seen the greatest return of capital, after investors fled the region last year, he noted.

The United States would continue to support reform in economically-troubled Russia, but some expectations for the region might have been overly optimistic, Summers said.

``It may be that we will have to await the Russian election before a sustained program of economic reform can be put in place,'' he said. ***************************************************************** I get it right is wrong and wrong is right.

-- jones@neverneverland.gone (RubinExit@GuessWhy.bye), August 13, 1999

Answers

WOA...Thats great news..It made me almost forget about Y2K.. Prediction---Alan Greenspan will hike 1/4 of a piont any way, and another 1/4, and maybe another. Somthing is a brewing, he needs the ability to give somthing back in a couple of months.

-- Les (yoyo@tolate.com), August 13, 1999.

Widening corporate spreads are good news?

Well now I could see that. Given that none of the internet stocks have any freaking revenues, it could be a sign that they are going to gain some through borrowing. This borrowing will then stimulate the US economy without creating any INFLATION whatsoever.

Once this is accomplished, most of the world will look at the US stock market capitilization of 17 trillion dollars,(whose only equal is the GDP of the entire freaking world, a measly 25 trillion dollars) and gasp. As they come to the awareness that the US is indeed a much better investment than the bankrupt Japanese economy they will hammer the Yen/Dollar into submission. The trade deficits will return to normal and China.Net will absorb Taiwan.screwedbytheUS.com to become OUR LANDLORDS......

WAKE UP OUT THERE! LARRY SUMMERS IS SMOKING CRACK IF HE THINKS THESE SPREADS ARE A GOOD SIGN. IF YOU BUY THAT, YOU DESERVE TO LOSE YOUR MONEY.

THE LIQUIDITY CRISIS HAS ALREADY BEGUN. .

-- Gordon (g_gecko_69@hotmail.com), August 13, 1999.

If the widening spreads are no problem, why was everyone so concerned about it last summer. Why did the Fed lower interest rates threee times?

-- Danny (dcox@ix.netcom.com), August 13, 1999.

Anyone catch the action on Wall St. today? I must have missed something. Did they fix y2k? Did world peace break out? Did aliens secretly lobotamize everyone on the trading floor? Talk about denial of EPIC proportions!

-- Gia (laureltree7@hotmail.com), August 13, 1999.

Today was a day for "good news" on a series of fronts.

The latest example, on Public TV in WI they had an hour on Y2K. To much to bore you with but the Lt. Gov. said the state is changing its advice: Instead of preparing for a 3-day winter storm and buying "a few extra cans of food" they are now suggesting make sure you keep bank/health records, but don't bother "stocking up" for the "storm". Also they are 93.7% ready. And overseas "fluctuations" won't bother us "here at home". And Koskinens second in command said she is proud of the job WI has done.

Could go on, but those of us addicted to reality (especially seeing the impossible Ponzi scheme stock market- as it currently is) are really getting hammered.

If this keeps up we should all invest everything in stocks and live "the good life", apparently reality no longer matters --- but on second thought, maybe I'll wait 'till after 1/2000, just in case. But next June, after a month or two in the market, look for me off the Florida coast or in Paris or in any $1000/night hotel.

-- Jon Johnson (narnia4@usa.net), August 13, 1999.

Niggers must DIE!!!!!!!!

-- antibush (antib-ush@hotmail.com), June 06, 2004.