Obama lobbies for $825 bln stimulus to thwart recession
WASHINGTON (AFP) - President Barack Obama was bidding Tuesday to win support for an 825-billion-dollar US rescue package aimed at checking a punishing recession that is taking a huge toll on the world labour market.
Obama got a boost Monday when the US Congress approved the appointment of Timothy Geithner as treasury secretary.
It will be up to Geithner, who recently served as head of the New York Federal Reserve Bank, to oversee Obama's ambitious bid to spark an economic recovery through massive public works spending.
Obama, who was to seek the backing Tuesday of skeptical Congressional Republicans, underlined the urgency of the task at hand, noting that 2.5 million US jobs were lost last year and seven major corporations had just announced thousands more cuts.
"We cannot lose a day because every day the economic picture is darkening, here and across the globe," Obama said Monday at the Treasury Department.
He was speaking on a day that saw forecasts for 85,000 job cuts worldwide as credit-starved companies slash payrolls to stay afloat.
On Tuesday Japanese electronics maker NEC Tokin announced plans to eliminate 9,450 jobs in the face of what it described as "stagnant demand following the global slowdown."
The current crisis, which intensified last September with the collapse of US investment bank Lehman Brothers, continues to have deep implications for big financial firms.
Japan's top securities company Nomura reported a record 3.8-billion-dollar quarterly loss Tuesday, blaming the financial meltdown and the cost of buying chunks of Lehman Brothers.
Nomura had moved swiftly to snap up Lehman's operations in Asia, Europe and the Middle East, forecasting in October that the total cost of the acquisition would be about two billion dollars.
Japanese financial firms are believed to be less exposed than many Western banks to losses linked to the troubled US sub-prime mortgage sector but have been hit hard by weak markets and Japan's first recession in seven years.
Asian authorities were meanwhile mobilising to stop the rot, with the Japanese government planning to inject 1.5 trillion yen (17 billion dollars) into ailing companies and India's central bank holding leading interest rates at historic low points.
The move by Tokyo cheered investors, with the Nikkei stock index soaring 4.9 percent.
Stocks rose elsewhere in Asia as well while in Europe share prices mostly fell on Tuesday, after sharp gains the previous day, on persistent jitters about the fate of the world economy.
A major casualty of the downturn has been the auto industry. Honda said it would roll back production further in Japan and North America while Audi announced a temporary stoppage at a plant in Hungary.
In Italy the head of Fiat, Sergio Marchionne, warned late Monday that the Italian auto sector could shed 60,000 jobs unless the state came to its rescue.
The British government was meanwhile to unveil measures to help the British auto sector, a spokesman for Prime Minister Gordon Brown said.
Geithner at his swearing-in ceremony said his agenda was "to move quickly ... to restore confidence in America's economic leadership around the world."
His immediate objectives are "to make our economy more productive ... to restore trust in our financial system with fundamental reform (and) to make our tax system better at rewarding work and investment," he said.
Geithner will be aided in his duties by the US central bank, the Federal Reserve, which opens a two-day meeting Tuesday in search of new tools to stimulate lending and revive momentum.
The meeting of the Federal Open Market Committee is being held six weeks after the Fed slashed its base lending rate to a range of zero to 0.25 percent and predicted "exceptionally low" rates to persist "for some time."
Sacha Tihanyi, analyst at Scotia Capital, said the market now expects some additional help from the Fed.
"With rates going nowhere for some time, the market's focus will be on whether the Fed will be looking to buy government (or corporate) securities in the near future.
"This is a highly controversial step and some see this as somewhat of a high-risk policy but on the other hand, it is one of the few avenues the Fed has left open to it with regard to further easing monetary conditions."