WASHINGTON - US President George W. Bush said Thursday there was "enough liquidity" to allow a correction in the markets, shaken by a crisis in the subprime mortgage sector.
"I am told there is enough liquidity to enable those markets to correct," said Bush, responding to a question at a White House news conference about the volatility in financial markets due to surging loan problems in the US property market.
Recalling that he was not an economist, the president said: "What I focus on are the fundamentals of our economy. My belief is people will make rational decisions based on facts. The fundamentals of our economy are strong."
He cited robust job creation and rising real after-tax wages.
Stock markets around the world have been rattled for weeks amid mounting fears of a credit crunch linked to the problems in the US subprime sector, where mortgage loans are made to people with poor credit histories.
Rising interest rates have led to a surge in home foreclosures as subprime borrowers can no longer pay their mortgages.
Thursday, BNP Paribas, a leading French bank, suspended three funds linked to the US subprime market, sending shares tumbling in Asia and Europe.
In this context, the European Central Bank pumped a record 94.8 billion euros (130.2 billion dollars) into European markets to help lenders shaken by the US mortgage crisis.
Bush said he did not expect a plunge in US home prices, which have been declining since early 2006.
"It would appear at this point in time that we are headed for a soft landing," he said.
He also pointed to strength in the global economy that has boosted US exports, helping drive the US second-quarter growth rate to 3.4 percent after a tepid 0.6 percent pace in the first quarter.
"Another factor one has to look at is the amount of liquidity in the system. Is there enough liquidity to enable markets to be able to correct? I am told there is enough liquidity to enable those markets to correct," he said.
Bush fended off a question about whether a government bailout was needed for people who have lost their homes.
"If you are talking about financial organizations helping people refinance their homes, yes, I support that," he said.
"One thing for certain is that there needs to be more transparency in financial documents. There are a lot of people signing up for something they are not sure what they are signing up for."
Bush said the government already had programs to teach people about personal investment issues and risks.
"I believe it is a proper role for the government to finance education initiatives, and we are doing that."
08/09/2007 15:44 GMT