| Advertisement President Bush on US government plans to buy shares in banks President George W Bush has announced that the US government is to buy stakes in the country's largest banks. In a move expected to cost $250bn (£143bn), the US government is moving to try to return stability to the American banking sector. Federal authorities will also temporarily insure most new debt issued by American banks. "This is an essential short-term measure to ensure the viability of America's banking system," he said. "This is not intended to take over the free market, but to preserve it." Mr Bush also said that the Federal Reserve would finalise work on a new programme that would make it the buyer of last resort for companies' short-term debt, known as commercial paper. Further, government insurance is being expanded to cover accounts used by small businesses. 'Restore normality' The money will come from the $700bn bail-out package approved by US lawmakers earlier this month. The US plan - effectively part-nationalisation - comes after the bosses of the country's largest banks were summoned to a special meeting at the US Treasury on Monday. Speaking overnight, US Federal Reserve chairman Ben Bernanke said he was confident the moves would be successful. "These steps will allow us to restore more normal market functioning and encourage private capital to further support the reinvigoration of financial markets," he said. Share surges Anticipation of the US announcement has had a major impact on global shares:
'Too small' The US government is expected to buy preference shares in the banks. Preference shares pay a fixed rate of interest instead of a dividend, which has to be paid before other shareholders receive anything, but they do not carry voting rights. US taxpayers may even end up making a profit from the shares if the rescue packages work and the banks recover, but that is not guaranteed. Despite the big rises in global shares, some analysts have questioned whether the US move is bold enough. "The actual amount [of the plan] is still a little small," said Nagayuki Yamagishi, a strategist at Mitsubishi UFL Securities. European lead America's move comes a day after the UK said it would inject up to £37bn of taxpayers cash into British banks Royal Bank of Scotland, Lloyds TSB and HBOS. And European governments that share the euro are putting aside more than 1 trillion euros to protect banks through guarantees and other emergency measures. The bulk of the money will be used to guarantee lending between banks. The cash will also be used to take stakes in ailing banks. | |
"After negotiations with two-star general Srey Douk, commander of Division 12, and the commander of Thai forces this morning near Preah Vihear temple, the Thai forces that entered Viel Entry on Monday right now have withdrawn from that area," according to Ministry of Foreign Affairs statement. Viel Entry is a small field near Preah Vihear temple, which has been at the center of a contentious military standoff since July 15. However, Thai Foreign Minister Sompong Amornviwat told reporters in Bangkok the troops were still in place near the area, Agence-France Presse reported. "All 80 troops will remain in the disputed area because Thailand has overseen that area for 20 to 30 years," AFP quoted Sompong as saying. "Of those 80 troops, 20 of them are mine clearance workers and the rest offer protection for the mine clearance troops." Thai troops remained in their positions along other points of the border in Oddar Meanchey and Preah Vihear provinces, Cambodian officials said. Worried arket vendors in Bantheay Meanchey province who cross the border daily in Poipot to sell on the Thai side stayed in Cambodia Tuesday. "They are afraid of a border conflict between the two countries, after they heard on the radio and TV the speech of Prime Minister Hun Sen, warning of large-scale conflict in the border dispute," Bantheay Meanchey Governor Oung Oun said. Renewed tensions over the border come following failed talks between the countries' foreign ministers in Phnom Penh on Monday and a statement to reporters by Hun Sen that warned Thai troops to withdraw from two areas, Viel Entry and Pram Makara, on Phnom Troap, near the temple. Phnom Troap was the site of a small skirmish that wounded one Thai and one Cambodian soldier earlier this month, and where two Thai soldiers were injured by landmines. The Thai Foreign Ministry said on its Web site Tuesday their soldiers would defend themselves "if Cambodia does resort to the use of force." "Thailand is surprised by the remarks by the Prime Minister of Cambodia issuing an ultimatum to Thailand to move its military personnel out of the area adjacent to the Temple of Phra Viharn (Preah Vihear) and threatening the use of force," the Thai Foreign Ministry said.
Original report from Phnom Penh
14 October 2008
Cambodian officials said Tuesday more than 80 Thai troops left two areas near Preah Vihear temple, a day after Prime Minister Hun Sen issued an ultimatum for their withdrawal.
14 October 2008 |
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| President Bush delivers remarks on the economy in the Rose Garden of the White House in Washington, Tuesday, 14 Oct. 2008 |
Speaking at the White House Tuesday, U.S. President George Bush said the plan will encourage banks to resume lending. Economists say the stalled credit market threatens to push the global economy into recession.
Besides buying a significant state in some banks, the new initiative guarantees loans between banks and insures more deposits.
The announcement follows crisis talks in the past few days with economic leaders from around the world. The U.S. plan follows similar moves by European governments, which have pledged about two trillion dollars to rescue their own banks.
The U.S. effort is funded by the $700 billion market rescue plan Congress approved earlier this month.
Major Asian and European markets rose strongly earlier Tuesday in anticipation of the new U.S. economic initiative.
Asian markets closed sharply higher for the second straight day. Japan's Nikkei, which was closed Monday for a holiday, led the way, climbing 14 percent.
Key European exchanges were also up about four percent in early trading, while Russia's main stock market soared more than 11 percent.
