Federal Reserve Chairman Paul A. Volcker and Vice Chairman Preston Martin put their public dispute behind them yesterday, although neither backed off from his differing ideas for dealing with the international debt crisis.
Volcker, at an international meeting in Tokyo, had issued a statement calling "incomprehensible" suggestions made publicly by Martin to put a lid on interest rates on loans to debtor nations, convert some of that debt to equity and involve a new international agency in effectively guaranteeing some of those loans.
Volcker said in Tokyo yesterday that he had spoken with Martin by telephone and that he is not looking for a fight with the vice chairman. But he reiterated that he wants to make sure debtor nations know there are no easy alternatives to tough austerity measures.
"I don't know what he had in mind, but I don't want to create the impression that there is some new debt strategy," Volcker said. "It's important at this time not to raise doubts or illusions as to whether there can be easy answers to difficult problems that are now being attacked forcibly."
Martin said in a telephone interview that he would not have broached those ideas before government officials, but that he felt they were appropriate when speaking to a group of business people. "It seemed to me it was a good forum," Martin said. "I don't want to make too much of this."
Martin said he had not intended to seem to be alluding to nations still in severe economic trouble, such as Argentina. Rather, he said, he was referring to "the Mexicos, Singapores and South Koreas" that need to find ways to attract business investment.
"I intend to pursue these ideas, but it may be that it would be more appropriate to do these things on an informal basis rather than in public," Martin said.