Global General

Special

Newsmaker

Asia Pacific

America

Middle East

Europe

Africa

US, others step up fight against economic crisis

(Agencies)
Updated: 2009-02-04 09:56

WASHINGTON -- Authorities in the United States and other countries extended crisis measures Tuesday in a bid to stem the worst financial turmoil since the Great Depression that has knocked economies sideways.

Traders stand outside of the New York Stock Exchange in January, 2009. Authorities in the United States and other countries extended crisis measures Tuesday in a bid to stem the worst financial turmoil since the Great Depression that has knocked economies sideways. [Agencies]

The US Federal Bank said a clutch of programs designed to inject liquidity into the frozen financial system, as well as currency swaps with 13 central banks, were extended back six months, through October 30, from the prior April 30 expiration date.

The US central bank said it took these actions "in light of continuing substantial strains in many financial markets," a statement said.

Those strains were apparent as companies in Asia, Europe and the United States announced further losses and job cuts as tight credit and recession bites deeper into bottom lines.

The Fed's half-year extension of liquidity programs for financial institutions reached out to 13 major central banks with temporary reciprocal currency arrangements, commonly known as swap lines.

The extension involves the central banks of Australia, Brazil, Canada, Denmark, Britain, South Korea, Mexico, New Zealand, Norway, Singapore, Sweden, Switzerland and the European Central Bank.

The Bank of Japan will consider an extension of its swap line at its next monetary policy meeting, the US central bank said.

The Japanese central bank announced it would spend up to one trillion yen (11.2 billion dollars, 8.6 billion euros) to buy shares held by commercial banks to ease the credit crunch in Asia's biggest economy.

Australia unveiled a 26-billion-dollar plan in what Prime Minister Kevin Rudd termed a "national and international economic emergency."

Sweden said it could inject up to 6.0 billion dollars into its troubled banking system.

The US auto industry felt more pain as General Motors reported a 49 percent plunge in domestic sales in January from a year ago. Ford sales fell 40 percent and Chrysler's 55 percent.

After vowing to help Italy's struggling auto industry, Prime Minister Silvio Berlusconi said the government would also assist the domestic appliance sector and shore up consumer credit after criticism from the opposition.

US President Barack Obama came under renewed pressure to resist protectionism in reaction to the global economic crisis.

"We must avoid protectionism," German Chancellor Angela Merkel told reporters when asked about a Buy American provision in Obama's 888-billion-dollar economic stimulus plan, currently under consideration in the Senate.

"Protectionism is the wrong answer" to the economic crisis, Merkel said.

The German leader's comments came after a similar warning in a speech in Tokyo by the head of the International Monetary Fund, Dominique Strauss-Kahn, who said: "Beggar thy neighbor policies will never give a good result."

Canada stepped up its protest of the Buy American initiative.

"If Buy America becomes part of the stimulus legislation, the United States will lose the moral authority to pressure others not to introduce protectionist policies," Canadian Ambassador Michael Wilson wrote in a letter to US Senate leaders.

Meanwhile, the United States and China, agreed on the need to continue high-level talks on economic issues, the US Treasury Department announced.

Treasury Secretary Tim Geithner spoke by phone with Chinese Vice Premier Wang Qishan late Monday and both men emphasized the need to maintain close consultations "during this difficult period for the global economy," a US Treasury statement said.

British oil giant BP reported a 24 percent slide in fourth-quarter net profit because of the sharp fall in oil prices and Swedish truckmaker Scania said its profits in the last three months of 2008 had fallen by 44 percent.

Japanese high-tech giant Hitachi, which is slashing up to 7,000 jobs, reported a 4.0-billion-dollar net loss for the nine months to December as the global slowdown crushed demand for electronic goods.

Social discontent amid the sharp global economic slowdown rose in Europe, with farmers in recession-hit Latvia taking to the streets to demand state aid and British refinery workers striking against the hiring of foreign workers.

The fallout from the crisis led to another sharp rise in unemployment in Spain in January, cementing its position as the country with the highest jobless rate in the 27-nation European Union.