Posts Tagged ‘China’
April 25th, 2009 | 
Author: Finance officials from some of the world’s top economic powers, which included, the United States, Japan, Germany, France, Britain, Italy and Canada, have pledged to get their countries banks lending again, believing it to be the best way to end the world’s worst recession since the 1930s.
Treasury Secretary Timothy Geithner and his counterparts from the world’s top seven industrialized democracies, acknowledged on Friday April 25, in a joint statement that their economies will need to be jump started in order for the global economy to rebound.
A joint statement read, “We are committed to act together to restore jobs and growth and to prevent a crisis of this magnitude from occurring again, and we will take whatever actions are necessary to bring that about. Recent data suggest that the pace of decline in our economies has slowed, and some signs of stabilization are emerging. Economic activity should begin to recover later this year amid a continued weak outlook and downside risks persist”.
A goal of raising $500 billion for an emergency lending facility was set by G-20 leaders at their London summit on April 2 and Obama has asked Congress to put up $100 billion, and Europe and Japan have pledged equivalent amounts.
Other major countries, which include China, Russia and Saudi Arabia, have not come yet honored their commitments however, because China and several other big developing countries like India want to link the support to having a bigger voice in the IMF which predicts that the global economy will shrink this year, something that’s never happened in the post World War II period.
Earlier this week the IMF called on world governments to boost stimulus spending, especially on infrastructure projects such as roads and bridges, in order to create jobs, but European nations are loathe to run up huge budget deficits and have so far resisted U.S. pleas to increase their spending.
France’s Lagarde noted, “We are in a bind, if you will. On the one hand we have to inject public money into the economy because we believe this is the strongest and best multiplier. At the same time, in the medium and long term, we need to restore the sustainability of public finance”.
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Posted in America, banking system, China, Commerce Department, crisis, deficits, depression, economy, Europe, federal debt, financial crisis, financial system, Geithner, global slowdown, IMF, Obama, politics, recession, Russia, stimulus | 
Tags: America, banking system, China, Commerce Department, crisis, deficits, depression, economy, Europe, federal debt, financial crisis, financial system, Geithner, global slowdown, IMF, Obama, politics, recession, Russia, stimulus | 
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U.S. Treasury Secretary Timothy Geithner announced March 14th, that he will soon be able to provide details of a plan, which it is hoped will help banks clean up their non-performing assets that are still clogging the financial system.
“We’re going to move quickly to lay out a new financing program to deal with these legacy assets. We have and expect to see a lot of support for this program among potential buyers of the assets. The Treasury already is well on its way to starting a dramatic lending program to help securities markets get flowing again. Regulators will ensure banks have a backstop of capital to make sure they can do what’s necessary to restore lending”.
Geithner’s program apparently has three main components;
1. It will inject government capital into some of the country’s biggest financial institutions.
2. A public-private partnership to handle as much as $1 trillion of banks’ bad assets will be setup.
3. A credit facility with the Federal Reserve of as much as $1 trillion to promote lending to consumers and businesses will be put in place.
The Treasury’s intention is to unfreeze the credit markets by providing new incentives to banks and investors, which will hopefully encourage them to resume trading in mortgage securities and other troubled assets.
