- The Washington Times - Friday, March 14, 2008

President Bush this morning admitted that the U.S. economy is experiencing tough times but urged against a government “overreaction,” saying that the real estate markets, in particular, need time to self-correct.

Mr. Bush also struck out against what he called a lack of American self-confidence leading to protectionist sentiments, including the rising opposition to sovereign wealth funds.

Speaking in Manhattan to the Economic Club of New York, the president sought to allay investor and consumer fears while also acknowledging, in some of his most clear terms to date, that the economy is suffering and Americans are worried.

In a free market theres going to be good times and bad times. Thats how markets work. There will be ups and downs, Mr. Bush said. And after 52 consecutive months of job growth, which is a record, our economy is obviously going through a tough time.”

The president said he was concerned about the number of people facing foreclosure, and said his administration is trying to help homeowners avoid losing their homes.

Foreclosure places a terrible burden on our families. Foreclosure disrupts communities, Mr. Bush said.

About 223,000 homes were in some state of foreclosure last month, according to RealtyTrac Inc., and the number of repossessed homes could hit as high as 750,000 to 1,000,000 by the end of this year. Yesterday, the dollar hit new lows, falling below 100 yen for the first time in 12 years, sending oil and gasoline prices to record highs and driving gold prices above $1,000 an ounce for the first time. Credit market turmoil resumed amid a massive liquidation of mortgage assets by the Carlyle Capital Corp. and other hedge funds that made losing bets on prime mortgages.

These are uncertain times, Mr. Bush to the audience of about 700, which included former Secretary of State Henry Kissinger, who was seated on the dais with more than a dozen others.

Mr. Bush insisted he is still optimistic about the economys mid- and long-term prospects, because of how markets responded to the recession he inherited as president and to the Sept. 11 terrorist attacks.

But Democratic congressional leaders, after working quickly with the White House on an initial economic stimulus package last month, have begun pushing for more government action to stem the economys slide.

The president said that the string of bad economic news in the last few months creates a temptationto put bad law into place.

Im deeply concerned about law and action that will make it harder for these markets to recover, Mr. Bush said.

The housing market, Mr. Bush said, has driven much of the economic downturn and the market is in the process of correcting itself.

Markets must have time to correct, he said.

The president touted action already taken by the government, including the $157 billion stimulus deal that will give rebate checks of between $300 and $1,200 to taxpayers, as well as tax rebates to businesses.

Mr. Bush reassured taxpayers that the rebate checks will indeed be mailed out by the second week in May.

He also said that attempts to help homeowners avoid foreclosure are being frustrated in part by the lack of response to more than a million letters that have been sent out. We got toll free numbers, and mailings and websites, Mr. Bush said, urging property owners to take advantage of federal assistance, which the Bush administration has aimed at homebuyers with otherwise good credit. The president said that the FHA Secure program, which has given the Federal Housing Administration greater flexibility to offer refinancing to struggling homeowners, has helped 120,000 families stay in their homes so far and aims to help 300,000 by the end of this year. At the end of his address, Mr. Bush turned to trade, denouncing the rising protectionism in Congress and in the Republican party, and calling once again for Congress to pass free trade agreements with Colombia, Panama and South Korea. He grew animated as he spoke about a number of cases over the past few years where public sentiment and political pressure have boiled up in fierce opposition to investment in U.S. companies by foreign governments, companies or funds. A confident nation accepts capital from overseas, Mr. Bush said. It makes no sense to deny capital, including sovereign wealth funds, from access to the U.S. markets.

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