Saturday, November 22, 2008

This Weekend's Contemplation - The President Elect and China are Stepping Up

At least we are not hearing that crap about the "US is fundamentally sound" from the new President Elect. He wants everyone to understand that it is going to take awhile to get out of the mess we are in. Also China is beginning to take its position in the world as a new economic power. I am not so sure it is replacing the US as much as it is rising to the occasion given its new found wealth. Where is Russia in all of this? Maybe it is busy beating up on little countries like Georgia.

"The Times They Are A-Changin" - old (1963) Bob Dylan song.

By the way for those of you that are too young to know who Bob Dylan is try the following from YouTube.

Text in bold is my emphasis. From Yahoo:

U.S. President-elect Barack Obama said on Saturday he was crafting a two-year plan to fight an economic crisis of "historic proportions" and Chinese leader Hu Jintao said his country was ready to play a big role in the global effort.

Hu, U.S. President George W. Bush and other leaders at the Asia-Pacific Economic Cooperation forum called for a global free trade deal to offset the economic crisis.

U.S. automaker General Motors Corp was considering "all options," including bankruptcy, because of its liquidity problems, according to The Wall Street Journal.

Citigroup Inc was in talks with the U.S. government amid doubts about its ability to survive.

Obama, who takes over from Bush on January 20, said, "There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better."

He was speaking in a radio address on Saturday, the day after reports that he had chosen New York Federal Reserve President Timothy Geithner as Treasury secretary rallied stock markets.
Obama, a Democrat, said swift and bold action was needed to prevent a deep slump, a spiral of falling prices and millions of job losses.

He signaled he was prepared to push for a much larger package than the $175 billion stimulus measure he called for in his election campaign. His plan would set a goal of creating 2.5 million more jobs by January 2011.

"The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions," Obama said.

In Lima, Chinese President Hu said the Asian powerhouse would work alongside the international community to strengthen cooperation and protect international markets.

China has been a major driver of the world economy as its rapid expansion fueled demand for raw materials. But with so many troubled countries looking to China to ease their financial woes, Beijing had been wary of taking a leading role.

"China is within the scope of its abilities taking major efforts to address the financial crisis," Hu said in a speech to business leaders.

This included providing support for liquidity for domestic financial institutions and coordinating macroeconomic policy with other countries.

The Wall Street Journal said General Motors was considering "all options" because of its liquidity problems. A GM spokesman told the paper that management was doing everything it could to avoid a bankruptcy filing.

Chief Executive Rick Wagoner, along with bosses from Ford Motor Co, and Chrysler, went to Capitol Hill this week to plea for $25 billion to bail out the auto industry.

Citigroup executives, meanwhile, met Federal Reserve and U.S. Treasury Department officials in recent days to discuss its options, which include another capital injection from the Treasury, a person familiar with the matter said.

The bank's management has also discussed selling off units or finding another bank to merge with.

In Germany, Chancellor Angela Merkel said she expected the first few months of next year to bear more bad news for Europe's largest economy, which is now in recession.

Merkel told Welt am Sonntag newspaper that economic development in Germany, Europe and the rest of the world was hard to predict, but "we have to expect the coming year, at least in the first months, to be a year of bad news."

George Soros, one of the world's first and best-known hedge fund managers, told Germany's Der Spiegel magazine the United States needed an infrastructure program and a large economic stimulus package to provide its cities and states with sufficient cash.

The U.S. government has launched a $700 billion financial bailout initiative in response to the turmoil. But the U.S. economy needed additional support measures of between $300 billion and $600 billion, Soros said.

He criticized U.S. Treasury Secretary Henry Paulson for having reacted too late to the crisis but said he had high hopes about Obama's ability to manage the situation.

"The duration of the crisis depends on the success of his policies," Soros said, according to Der Spiegel.

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