When it comes to the economy, there is rarely any good news. President Obama put a momentary end to that on Monday when he announced a financial rescue plan to remove the toxic assets from the nation’s banks.
“The good news is that we have one more critical element in our recovery,” Obama said, encircled by members of his economic team. “But we’ve still got a long way to go.” Additional good news came with reports that the Dow Jones rose nearly 500 points.
In yet another effort to allay the outrage from Americans across the nation, Obama’s plan is to absorb all the assets hampering the balance sheets of banks and thereby allow them to resume lending to consumers and businesses.
With his usual caution and tamping down expectations, the president said that the plan is “not going to happen overnight. But we think that we are moving in the right direction.” Thawing the frozen credit line and lending stream is sure to have some impact since it was these troubling factors that exacerbated the economic crisis and debilitating recession.
Wall Street may have cheered Obama’s gambit, but the American dollar “remained on the defensive versus the euro and sterling, but advanced against the yen after Japan’s finance minister said that a massive government stimulus package would be necessary to prevent the current fiscal quarter from repeating the 12.1 percent economic contraction seen in the fourth quarter of 2008,” according to a financial news report.
Essential to Obama’s plan is to seek the help of private investors as it attempts to rid banks of possibly as much as $1 trillion in bad assets, according to reports based on a piece in the Wall Street Journal. “Under the plan, the Treasury will subsidize the private investors’ purchase of troubled assets,” the article continued.
Obama seemed energetic about the current state of recovery and expressed an optimistic outlook about the persistently gloomy housing market.
“We…took a series of steps to improve liquidity in what had been secondary markets that had been completely frozen,” Obama explained in terms ordinary citizens can understand. “And we are now seeing activity in student loans and auto loans. We announced last week a small business initiative that ensures that we have more activity and you start seeing small businesses being able to get credit again in order to sell products and services and make payroll.”
This initiative is a prelude to Obama’s scheduled trip to the G-20 summit.
“And I’m looking forward to traveling to the G-20 so that we ensure that the activities that we’re doing here in the United States are effectively matched with comparable action in other countries,” he said. “And Secretary Geithner has already traveled and met with the finance ministers of the G-20 states so that we can make sure that we’re all moving on the same page.”
Obama put off until Tuesday any questions from the press about how he will reassure skeptical taxpayers, many of whom are tired of all the bailouts and fiscal rescue plans.
The president and his economic advisers are well aware that the current economic collapse is global, and in order to ensure full recovery, the European and Asian nations need to enact their own stimulus plans.
During appearances on “60 Minutes” and Jay Leno’s late-night show, Obama spelled out some of the measures before they were announced on Monday. But his detractors feel he’s doing far too much television and Air Force One hopping and not enough in the Oval Office behind the desk, dealing directly with the nation’s economic tsunami.
The president also spoke in upbeat terms about the state of the recovery. He said there were “glimmers of hope” in the deeply depressed housing market, with low interest rates sparking activity. He said there were improvements in college and auto loans, the kind of lending critical to helping families and businesses.
Obama spoke after getting an economic briefing in the Cabinet Room. He was joined by Treasury Secretary Timothy Geithner, Federal Reserve Chairman Ben Bernanke and other key economic advisers.