US Economy 'Sustainable and Self-Propelling'
This is a transcript of top stories presented by China's CCTV Business Channel as produced by CNBC Asia Pacific.
A big hello to our viewers across China.
I'm Saijal Patel and you're watching "Asia Market Daily".
The Japanese stock market's recovery lost steam today - with the Nikkei closing down 1.66 percent.
Despite the crisis, the Tokyo stock exchange has managed to stay open.
CNBC's Kaori Enjoji got some insight into Japan's financial system - from the head of the TSE - in a CNBC exclusive interview.
Atsushi Saito, President of Tokyo Stock Exchange:
We have the rule here if the participants, more than 20 percent of the participants cannot join the trading for some reason, we have an internal rule to shut down the market, because it's an unfair market. But as far as the majority of the participants can approaches our and also as far as our machines are working, there's no reason for us to shut down the market, because the, our cash market venue is always offering the high liquidity, high transparency, so on this occasion, this time, fortunately our modern machines worked perfectly without any problems.
Kaori Enjoji, CNBC:
Everyone says the strain of electricity is the most problematic, and the strain is going to come in summer time when the demand peaks. Are you considering the possibility of shortening trading hours to cope with the strain?
No, in this building we have two lines of electricity supply and also we have in-house generator, so probably we will not face any shortage or problem in electricity. But in all, yes I don't deny we may face shortage of electricity supply. Already very quietly, they don't speak, but quietly, major consumers of power are shifting towards less crucial or so. So there is some negative impact yes but as far as all of Japan is concerned it's not so serious, it's only Tokyo areas we will by all means face shortage of electric supply.
We have the earthquake, the tsunami, the nuclear situation, this is an unprecedented situation in Japan's history. What do you think is going to be the long term economic impact from these 3 events?
Well in the long term I don't think it is so much serious for us. The northern part of Japan, accounts for less than 4 percent of total GDP productions and most of them, the fishing villages, and naturally, I don't deny that there are some of these manufacturers, these large manufacturers who are making the parts, or supplying the parts, that are damaged to some extent. But that will be repaired they said within one week or two weeks at most, and they will resume their production. We saw the same cases also after the war, so we didn't lose any main core production facilities at all, so rather, we have learnt a lot, what, we are lucky.
Elsewhere, the U.S. Federal Reserve kept its easy money policy unchanged last week, voting unanimously to forge ahead with its $600 billion bond-buying program, designed to support a fragile recovery.
So just how well is America faring right now?
In a CNBC exclusive interview, Annette Weisbach asked Dallas Fed President Richard Fisher what his thoughts are, on the state of the U.S. economy.
Richard Fisher, President, Federal Reserve Bank of Dallas:
I would call it sustainable and self propelling now and it's my view that the Federal Reserve has been of assistance. But it is in my view unlikely we will have, or need more accommodation from the Central Bank, by the Federal Reserve, I think we've done our job.
Annette Weisbach, CNBC:
You've been an outspoken critic of QE2. There are voices right now talking about QE3, what are you discussing right now in the FOMC?
I never discuss what we're discussing within the FOMC, but I know there is a lot of discussion in the private sector. My own personal feeling is barring some extraordinary circumstance I cannot foresee, I would vote against, and I have the vote this year, I would vote against a QE3 or even a tapering off the current program. I don't think it's necessary. Again we have a self sustaining recovery, I wish it were stronger, I believe it will gather strength, assuming there's no major disruption. At this moment no one can foresee, and I think we should allow the economy to proceed on its own steam. It's now up to the fiscal authorities to provide the right incentives for businesses to hire more American people.
Here in the Eurozone we are already worrying about inflation with Jean-Claude Trichet already hinting of potential rate hikes as soon as April. Are you worrying about inflation as well in the United States?
I'll tell you, I am worrying about, general price inflation is being impacted by commodities, the price of oil which translates into gasoline. And we're seeing also price pressures coming from the importation of goods from China in particular. So we talk often about core inflation, trying to get the underlying trend, but the American people's purchasing power, or the value of savings, which by the way isn't earning very much under current interest rate regime, can be diminished significantly by inflation. So we are all mindful of this phenomenon. Speaking personally I am concerned and going to be excessively vigilant on that front.
U.S. Debt is actually another point which is actually worrisome as well for people here in Europe. What do politicians have to do right now in terms of fiscal consolidation?
Well I'm not a politician, I'm a central banker. I will say this, in my personal view the central bank isn't enough. We liquefy the economy quite successfully when it ran out of gas and stopped. We went to work with central bankers, lenders of last resort, we have re-liquefied the economy. There are plenty of signs that there is plenty of liquidity in the economy. Excess bank reserves, corporate cash, and also that of non-banking financial intermediaries. So we have the means to propel the economy forward. The question is how do you raise taxes? Well the best way to do it is through economic activity, and how do fiscal authorities cut back on their spending or redirect both taxes and spending to give incentives to businesses, to use the fuel we've given them, the liquidity, to hire American workers and to me our job is done. Now the pressure and the job is in the hands of our elective representatives who have the only power to tax and to spend and unfortunately that's not a power given to central bankers like me.
With debt levels reaching very high levels are you worried about the stability of the U.S. dollar?
We've seen a rush to quality with extraordinary circumstances around the world and as you know the dollar has been trading around the 40 Euro level presently. But if you remember it was trading up in the high 180s and also traded down to the low-high 80s, so these are manic-depressive markets. I don't spend an excessive amount of time worrying about that. What I do care about is the purchasing power of the dollar, that's my job as a central banker.
Well that wraps up the latest "Asia Market Daily".
I'm Saijal Patel from CNBC.
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