The US Treasury was to detail yesterday its plan to purge banks of toxic assets with the help of private investors, a key part of Washington’s drive to pull the world’s biggest economy out of a severe recession.
The scheme to rid banks’ balance sheets of up to US$1 trillion of bad loans and securities that thwart lending is central to US President Barack Obama’s effort to revive the economy with stimulus spending, a financial sector clean-up and regulatory reform.
Treasury Secretary Timothy Geithner said in an interview with the Wall Street Journal that private sector participation was essential to the scheme’s success: “We don’t want the government to assume all the risk. We want the private sector to work with us.”
The plan includes incentives in the form of abundant loans and generous terms to entice private investors to buy the unwanted assets, a source familiar with the matter said.
The news sent US stock futures and Asian share markets higher yesterday. Currencies that were sold off heavily during bouts of market volatility, such as the Australian dollar, also rose.
The US Treasury’s plan comes at a crunch time for Obama, who prepares to meet fellow G20 leaders at a financial summit in London on April 2 and struggles to contain public anger over big bonuses paid by insurer American International Group (AIG) that has been bailed out with US$180 billion in taxpayer money.
The new White House team is also trying to win support for big-ticket items in Obama’s record US$3.5 trillion budget proposal for the 2010 fiscal year — something in very short supply among Republicans in Congress.
Obama’s team was “incredibly confident” the economy will start growing again this year, Christina Romer, head of the White House Council of Economic Advisers, said on Sunday.
Obama offered a word of caution, warning the US financial system still faced risks requiring government intervention to avoid a more destructive recession.
“There are certain institutions that are so big that if they fail, they bring a lot of other financial institutions down with them,” Obama said in an interview with the CBS program 60 Minutes aired on Sunday. “And if all those financial institutions fail at the same time, then you could see an even more destructive recession and potentially depression.”
In a wide-ranging interview, Obama also acknowledged surprise at how quickly the US economy crumbled between his November election and January inauguration.
“I don’t think that we anticipated how steep the decline would be,” he said. “That slope is a lot steeper than anything that we’ve said — we’ve seen before.”
Obama issued his standard and optimistic long-term prognosis for the economy, but responded, “Yes,” when asked if “the financial system could still implode if you had a big failure at AIG or at Citicorp?”
He said that he felt caught in a balancing act, trying to assuage taxpayer anger at Wall Street with the need for support from the financial sector for his attempts to stop the country from plunging into fiscal turmoil.
The Ministry of Transportation and Communications yesterday inaugurated the Danjiang Bridge across the Tamsui River in New Taipei City, saying that the structure would be an architectural icon and traffic artery for Taiwan. Feted as a major engineering achievement, the Danjiang Bridge is 920m long, 211m tall at the top of its pylon, and is the longest single-pylon asymmetric cable-stayed bridge in the world, the government’s Web site for the structure said. It was designed by late Iraqi-British architect Zaha Hadid. The structure, with a maximum deck of 70m, accommodates road and light rail traffic, and affords a 200m navigation channel for boats,
Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s largest foundry service provider, yesterday said that global semiconductor revenue is projected to hit US$1.5 trillion in 2030, after the figure exceeds US$1 trillion this year, as artificial intelligence (AI) demand boosts consumption of token and compute power. “We are still at the beginning of the AI revolution, but we already see a significant impact across the whole semiconductor ecosystem,” TSMC deputy cochief operating officer Kevin Zhang (張曉強) said at the company’s annual technology symposium in Hsinchu City. “It is fair to say that in the past decade, smartphones and other mobile devices were
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