Maybe he knows the fed won’t cut the fed funds rate….

Paulson says economy healthy

updated 10:33 p.m. ET, Fri., Dec. 7,2007
SOURCE: Reuters

Treasury Secretary Henry Paulson said on Friday Washington was following a strong dollar policy and indicated he expected it to rebound, emphasizing the U.S. economy’s long-term strength should help the currency.

But Paulson warned in a radio interview in Cape Town that some aspects of the U.S. subprime mortgage crisis would become worse before getting better.

Paulson is in South Africa partly for a weekend meeting of finance chiefs from the Group of 20 economies, some of whom have expressed concern that the dollar’s falling value is putting strain on their ability to export.

“We have very much a strong dollar policy … that’s in our nation’s interest. Our economy, like any other, goes through its ups and downs but I believe the U.S. economy will continue to grow and its long-term strength will be reflected in our currency markets,” Paulson told 567 Cape Talk radio.


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2 Responses

  1. Warren, you missed the last two FFR calls. Anything different this time? The Fed worries about the buoyancy of the stock market so how can they not cut when futures has it priced in and they’ve hinted about it in the last couple of weeks. The market will probably sell off it they don’t go more than a 25 BP cut.

  2. > Comment:
    > Warren, you missed the last two FFR calls.
    >Anything different this time?

    The debate at the meeting will be the same. Inflation is ominous to most members, while at the same time the fear of systemic risk is highest with those who are the least concerned about inflation. So it’s back to how they see the ‘balance of risks.’

    > The Fed worries about the buoyancy of the stock market so how can they not
    > cut when futures has it priced in

    Yes, that will be an issue as well. No cut will be expected to result in a firming $, falling commodities, and an equity decline. To some voting members that will be a most desirable outcome, to others not.

    >and they’ve hinted about it in the last
    > couple of weeks.

    Depends on who’s reading the speeches. Seems clear to me they were at least balanced, and, if anything most leaned towards an increased inflation risk. But the financial press didn’t read them that way.

    I’ll be doing a longer piece tonight.

    >The market will probably sell off it they don’t go more
    > than a 25 BP cut.

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