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Japan signals broader bailout plan, markets firm
(Agencies)
Updated: 2008-10-21 14:49 BEIJING -- Japan signaled a willingness to broaden its bank bailout plan to include the country's big banks as it considers ways to bolster its defenses against the global crisis even as signs emerge that banks and investors are cautiously regaining confidence. US Federal Reserve Chairman Ben Bernanke backed government spending as a fresh measure to support the world's biggest economy following the tumult since the collapse of Lehman Brothers last month.
Stock markets in Asia picked up on where the United States and Europe left off, with key indexes up in Japan and across most of the region. In money markets, the interbank cost of borrowing dollars for three months recorded on Monday the sharpest fall since January. Short-term funding costs eased further in Asia on Tuesday. In contrast to the market mood, South Korean President Lee Myung-bak said a looming global recession could swamp measures taken by the country to steer through its own shoals of a heavily indebted banking system and slowing economy. "The overall situation is more serious than the 1997 (Asian financial) crisis. Back then it was an Asian crisis but today the entire world economy is at risk," Lee was quoted as saying by presidential spokesman Lee Dong-kwan, according to Yonhap. Korean authorities announced a $130 billion bailout package at the weekend, joining other governments around the world that have pledged well over $3 trillion to resolve the financial storm that has toppled banks in the United States and Europe. Another stark reminder of the seriousness of the crisis came from a report that Pakistan was in talks to obtain up to $15 billion in rescue money from the International Monetary Fund and other bodies. Pakistan, whose support is crucial to the NATO mission in Afghanistan, needs a massive cash infusion to stabilize its economy and pay for necessary imports. Big Banks In Japan, Economics Minister Kaoru Yosano said the country's big banks should also be entitled to injections of public funds if need be as the government considers reviving a law that allows the recapitalization of banks. "When considering the need to facilitate lending to small firms, I can't see any reason why big banks should be discriminated against," Yosano told a news conference. His comments came as the Japanese government's nominee for the post of central bank deputy governor said tensions were gradually mounting in the country's money markets. "The uncertainty over the Japanese economic outlook is growing further," Hirohide Yamaguchi said in a confirmation hearing in parliament's lower house. |
