US President Barack Obama’s economic adviser on Friday defended the administration’s efforts to rescue banks, insurance companies and car makers, saying the actions were taken out of “necessity, not choice.”
Lawrence Summers’ remarks come after government bailouts of insurance giant American International Group Inc, Citigroup Inc and other banks, General Motors Corp and Chrysler LLC have put billions of taxpayer dollars at risk, and in some cases provoked public outrage.
In a speech to the Council on Foreign Relations in New York, Summers said the government has intervened to avoid further damage to the economy and financial markets.
“We act only when necessary to avert unacceptable — and in some cases dire — outcomes,” the director of the White House National Economic Council said.
The president “did not run ... to manage banks, insurance companies or car manufacturers. The actions we take are those of necessity, not choice.”
The focus is to ensure that such intervention is temporary, based on market principles and “minimally intrusive,” Summers said.
On the economy, Summers used slowing job losses and rising consumer and business sentiment to suggest that the worst of the recession has passed.
“While we still have a long way to go, the sense of free-fall that surrounded any reading of economic statistics a few months ago is no longer present,” he said.
Nevertheless, many investors are beginning to worry that higher oil prices and bond yields could limit the extent of an economic recovery, especially if they hit US consumption. Without the support of the US consumer, which accounts for around 70 percent of the US economy and 20 percent of the global economy, any recovery will soon fizzle out.
Figures on Friday showed little evidence of a marked improvement in US consumer confidence. The University of Michigan said its consumer sentiment index increased only modestly this month to 69 from May’s 68.7.
While crediting the president’s stimulus package of increased government spending and tax cuts for contributing to the economic improvements, Summers warned that policymakers can’t be complacent.
“There have already been several false dawns during this crisis,” he said.
Summers also called for revamping the nation’s regulatory structure to better guard against future financial crises.
DOLLAR CHALLENGE: BRICS countries’ growing share of global GDP threatens the US dollar’s dominance, which some member states seek to displace for world trade US president-elect Donald Trump on Saturday threatened 100 percent tariffs against a bloc of nine nations if they act to undermine the US dollar. His threat was directed at countries in the so-called BRICS alliance, which consists of Brazil, Russia, India, China, South Africa, Egypt, Ethiopia, Iran and the United Arab Emirates. Turkey, Azerbaijan and Malaysia have applied to become members and several other countries have expressed interest in joining. While the US dollar is by far the most-used currency in global business and has survived past challenges to its preeminence, members of the alliance and other developing nations say they are fed
LIMITED MEASURES: The proposed restrictions on Chinese chip exports are weaker than previously considered, following lobbying by major US firms, sources said US President Joe Biden’s administration is weighing additional curbs on sales of semiconductor equipment and artificial intelligence (AI) memory chips to China that would escalate the US crackdown on Beijing’s tech ambitions, but stop short of some stricter measures previously considered, said sources familiar with the matter. The restrictions could be unveiled as soon as next week, said the sources, who emphasized that the timing and contours of the rules have changed several times, and that nothing is final until they are published. The measures follow months of deliberations by US officials, negotiations with allies in Japan and the Netherlands, and
TECH COMPETITION: The US restricted sales of two dozen types of manufacturing equipment and three software tools, and blacklisted 140 more Chinese entities US President Joe Biden’s administration unveiled new restrictions on China’s access to vital components for chips and artificial intelligence (AI), escalating a campaign to contain Beijing’s technological ambitions. The US Department of Commerce slapped additional curbs on the sale of high-bandwidth memory (HBM) and chipmaking gear, including that produced by US firms at foreign facilities. It also blacklisted 140 more Chinese entities that it accused of acting on Beijing’s behalf, although it did not name them in an initial statement. Full details on the new sanctions and Entity List additions were to be published later yesterday, a US official said. The US “will
Foxconn Technology Group (富士康科技集團) yesterday said it expects any impact of new tariffs from US president-elect Donald Trump to hit the company less than its rivals, citing its global manufacturing footprint. Young Liu (劉揚偉), chairman of the contract manufacturer and key Apple Inc supplier, told reporters after a forum in Taipei that it saw the primary impact of any fresh tariffs falling on its clients because its business model is based on contract manufacturing. “Clients may decide to shift production locations, but looking at Foxconn’s global footprint, we are ahead. As a result, the impact on us is likely smaller compared to
RSS