The moment for refinancing

THOSE bulls galloping through the canyons of Wall Street -- measured by this week's upward swing in the stock market -- have a lot to snort about. Interest rates are down. The housing market is in resurgence. Inflation remains low. Oil prices have fallen. More Americans than ever are at work. In short, the US and global economies continue to look strong. Precisely because conditions are humming along so well, it is time for US political leaders -- as well as the world financial community -- to take a number of steps to put their economic houses in order. Hundreds of thousands of homeowners, as well as many corporations, for example, are doing just that -- refinancing mortgages written at high interest rates several years ago. Similarly, many consumers and businesses are seeking to retire outstanding debt.

The world's financial leaders are showing greater leadership on at least one front -- better coordination of national monetary policies. The recent joint action of the central banks of West Germany, Japan, and Washington in cutting their discount rates -- and thus, prodding a further easing of interest rates -- should help spur global growth. The coordinated action on the interest-rate front follows earlier collaborative steps aimed at bringing down the value of the dollar.

More is needed. The world community, for example, needs to develop a more coordinated policy to deal with third-world debt, now estimated at well over $900 billion. The plummeting of oil prices underscores the need for action. For oil-producing debtor nations, lower oil prices means lower incomes earnings to meet debt payment schedules. For non-oil-producing debtor nations, meantime, the current decline in oil prices adds up to a propitious moment to refinance or retire existing debt to concentrate on strengthening their economies.

The nations of the industrial West, meantime, also need to take action to deal with their long-term unemployment. Jobless rates continue to run at high levels. In the US, the jump in unemployment for February puts the jobless rate back at 7.2 percent, the range that prevailed during the first half of 1985. The best moment to reduce such unemployment through job training, relocation assistance, and other adjustment programs is when overall conditions are good, and before an economic recovery loses steam and jobless rates climb further.

Finally, US political leaders would seem best served in moving forward on a deficit-reduction package. Senate leaders warrant credit for discussing what to the White House is almost unthinkable, namely, combining modest tax hikes with reductions in spending.

The world economy has probably never been more interrelated. For that reason, political and financial leaders need to take actions to sustain the current recovery, which has stimulated the Wall Street surge.

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