Cablegate: Media Reaction - U.S. Economy and Global Markets

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RR RUEHWEB

DE RUEHSG #1537 2641852
ZNR UUUUU ZZH
R 211852Z SEP 07
FM AMEMBASSY SANTIAGO
TO SECSTATE WASHDC 2183

UNCLAS SANTIAGO 001537

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STATE FOR INR/R/MR, I/PP, WHA/BSC, WHA/PDA, WHA/EPSC STATE FOR
INR/IAA, PM, INL

E.O. 12958: N/A
TAGS: OPRC KMDR KPAO ECON CI
SUBJECT: MEDIA REACTION - U.S. ECONOMY AND GLOBAL MARKETS

1. September 21, conservative, influential newspaper-of-record "El
Mercurio," carried the editorial "International Economic Ups and
Downs." Quotes follow:

2. "The drop in home sales and the price of real estate in the
United States has been a strong blow for global financial
markets.... The crisis originated in the loans granted to shaky
debtors.... This was risky, but the last three years had become
extremely attractive give the strong economic growth.... There is
no question that rash decisions were made, ignoring the historical
fact of economic cycles. But it is also true there were important
innovations that have increased economic productivity.

3. "And it is precisely the strong capability of the U.S. economy to
innovate that gives us a moderate degree of optimism that this
crisis will be absorbed gradually and not become a deep
recession.... The Federal Reserves has acted consistently and...
the market had responded with enthusiasm, validating the theory that
there will be a soft landing rather than an economic collapse.
Consequently, the global economy can continue to expect relatively
high growth, although less than the five percent expected for next
year."

YAMAUCHI

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