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World scrambles for economic rescues, prospects gloomy for L. America

Published: 25/03/2009 05:00

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Amid worries that current remedies could lead the world economy to nowhere, the world’s nations press on with their rescue plans.

Britain’s Prime Minister Gordon Brown (L) and U.N. Secretary-General Ban Ki-moon hold a news conference after their official meeting at the United Nations headquarters in New York,the United States, March 25, 2009. (Xinhua/Shen Hong)

The United States, which has staged a multi-pronged strategy to reboot its economy, received vehement criticism from the European Union on Wednesday.

Washington’s plans to fight the global economic crisis are “the way to hell,” said Prime Minister Mirek Topolanek of the Czech Republic, which currently holds the EU presidency.

Speaking at the European Parliament in Strasbourg, France, Topolanek said that the huge stimulus plans and banking rescue measures of U.S. President Barak Obama’s administration would destabilize global financial markets.

Citing the swelling budget deficit and the “Buy American” measures, Topolanek said that the United States “did not take the right path.”

“All of these steps, these combinations and permanency are the way to hell,” said the Czech leader, whose government collapsed after losing a parliamentary no-confidence vote on Tuesday.

“Americans will need liquidity to finance all their measures and they will balance this with the sale of their bonds but this will undermine the stability of the global financial market,” Topolanek said.

There have long been doubts of the effectiveness of the government’s economic remedies even within the United States, and this sense of insecurity has spiraled into a public outrage on a recent bonus scandal of the American International Group (AIG).

The U.S. insurer, which received 170 billion dollars in bailout money to keep it afloat last year, gave 165 million dollars to its executives in bonuses.

Seeking to rally more support for his efforts to tackle the crisis, President Obama assured Americans on Tuesday that there were “signs of progress” toward recovery, while pleading for more time and patience.

His administration on Wednesday unveiled key details of a draft legislation to grant regulators broader power to seize non-bank financial companies whose collapse could jeopardize the economy.

The draft bill would allow the government to put a firm into conservator ship or receivership and then to administer their effective, orderly reorganization or wind-down.

Moreover, it would enable the government to reduce the need for taxpayer funds.

Although the developed world is the first to feel the chill of the financial crunch, their developing neighbors are inevitably enveloped in the crisis.

Latin America’s economy will suffer negative growth this year, a top International Monetary Fund official announced Wednesday.

The IMF’s director for the Western Hemisphere Nicolas Eyzaguirre said he expects the average country in Latin America to be “in negative territory” in 2009, “but not that much.”

Eyzaguirre warned Latin American financial institutions could suffer continued capital losses in the year.

The official said outlook for the big three economic regions –the United States, Europe and Japan, would be even harsher, predicting a slowdown for the global economy.

UN Secretary-general Ban Ki-moon on Wednesday said he had sent letters to the participants of the G20 summit in London, asking for “urgent and decisive action” to deal with the ongoing global financial crisis.

The secretary-general made the statement at a joint press conference with visiting British Prime Minister Gordon Brown following their talks. Brown is the chairman of the London summit, scheduled for April 2 to address the current crisis.

“A prolonged and severe recession, if not addressed boldly with urgent attention given to the needs of the vulnerable, could likewise affect countries and regions with profound consequences for the security and stability of us all,” Ban said.

VietNamNet/Xinhuanet

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