Paulson says U.S. economy can withstand turmoil: report

TOKYO Thu Aug 16, 2007 1:39am EDT

Treasury Secretary Henry Paulson testifies on Capitol Hill, June 20, 2007. Paulson said the turmoil in global markets will ''extract a penalty'' on growth but the financial system and economy was strong enough to withstand it without provoking a U.S. recession. REUTERS/Larry Downing

Treasury Secretary Henry Paulson testifies on Capitol Hill, June 20, 2007. Paulson said the turmoil in global markets will ''extract a penalty'' on growth but the financial system and economy was strong enough to withstand it without provoking a U.S. recession.

Credit: Reuters/Larry Downing

TOKYO (Reuters) - U.S. Treasury Secretary Henry Paulson said the turmoil in global markets will "extract a penalty" on growth but the financial system and economy was strong enough to withstand it without provoking a U.S. recession.

"The economy and the markets are strong enough to absorb the losses," Paulson told the Wall Street Journal in an interview published on its Web site on Thursday.

Paulson also said the repricing of risk in markets should not surprise anyone and was inevitable, and that nothing should be done to guarantee market players against losses or restrain them from taking risks.