--Does Not Rule Out FX Intervention But Questions Purpose
--Says More Room Should Be Given to Free Markets to Forestall Crises
--Quoted as Expressing Concern About Immediate US Outlook But Being
Optimistic Economy Will Recover Quickly
--Says Not Bringing 'Message' to Weekend G7 Meeting in Palermo
--Remarks Come in Financial Times Interview

FRANKFURT (MktNews) - U.S. Treasury Secretary Paul O'Neill hinted in a Financial Times (FT) interview published Thursday that the Bush Administration would be strongly skeptical about official intervention in global markets to help stabilize the international economy.
Still, O'Neill was careful to not rule out U.S. involvement in coordinated currency market intervention or in IMF efforts to assist countries in financial crises. But he suggested that a greater focus should be placed having free markets prevent crises from developing.
"Why do we have to intervene? Especially why do we have to intervene on a crisis basis? (Crises) are great media fodder but they're not real hot for anybody else," O'Neill said.
He said the failure in the past to forestall crises involved a failure to let markets develop freely.
"It doesn't have anything to do wit the failure of capitalism. It's to do with an absence of capitalism," O'Neill argued.
In that connection, O'Neill indicated that he was concerned about the problem of "moral hazard," whereby investors behave recklessly in the belief that governments will bail them out of trouble.
"When you don't have risk associated with investment you don't really have capitalism," he said. "You have a kind of socialized lottery system."
As to this weekend's meeting of G7 finance ministers in Palermo, Italy, O'Neill indicated that he was mainly interested in hearing what other government's will have to say.
"I would not characterize what I want to do at this meeting as bringing a message," he said. "I'm interested in watching the process and finding out what others think the value is that's created by this process."
According to the FT, O'Neill expressed concern about immediate U.S. growth prospects but seemed optimistic that the economy would recover quickly.