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Obama call for action fails to impress market
Barack Obama has called for dramatic action to stave off a recession lingering for years in the United States, but his speech failed to impress the markets.
In a widely-trailed address the President-elect said yesterday that unemployment could reach 10 per cent unless a far-reaching economic stimulus plan was implemented.
After his call for action America's benchmark Dow Jones index fell and experts predicted it would do little to improve the economy in the short term.
Mr Obama, speaking in Virginia, painted a bleak picture if his plans are not approved.
He said: "If nothing is done this recession could linger for years. The unemployment rate could reach double digits. Our economy could fall one trillion dollars short of its full capacity, which translates into more than $12,000 in lost income for a family of four.
"In short a bad situation could become dramatically worse.
"We arrived at this point due to an era of profound irresponsibility that stretched from corporate boardrooms to the halls of power in Washington DC.
"For years, too many Wall Street executives made imprudent and dangerous decisions, seeking profits with too little regard for risk, too little regulatory scrutiny and too little accountability."
The speech was short on detail, some said, but Mr Obama said his plan would represent "not just new policy, but a whole new approach to meeting our most urgent challenges".
He added: "If we hope to end this crisis we must end the culture of anything goes that helped create it – and this change must begin in Washington.It is time to trade old habits for a new spirit of responsibility.
"It's time to finally change the ways of Washington so that we can set a new and better course for America."
He also hit out at regulatory failings that allowed the crisis to develop.
Mr Obama said: "No longer can we allow Wall Street wrongdoers to slip through the regulatory cracks. No longer can we allow special interests to put their thumbs on the economic scales.
"No longer can we allow the unscrupulous lending and borrowing that leads only to destructive cycles of bubble and bust."
The President-elect said he was confident the package would "save or create at least three million jobs over the next few years".
He added: "For every day we wait or drag our feet, more Americans will lose their jobs. More families will lose savings. More dreams will be deferred and denied. And our nation will sink deeper into a crisis that, at some point, we may not be able to reverse."
But the speech failed to impress some economists.
John Lonski, chief economist of Moody's Capital Markets Group, said: "These proposals are unlikely to be of much near-term benefit to economic activity and may not do much to lift the economy from the current slump.
"Disappointment might be too strong a word, but it has not done much to boost investor confid-ence and that is critical for the US economy. It was unimpressive."
He pointed out that the Dow Jones dropped 20 points within an hour of the speech, bringing it down 65 on the day.
"Financial markets did not stand up and applaud Mr Obama's fiscal stimulus proposals," Mr Lonski said.
Dean Baker, economist at the Center for Economic Policy Research, said he was "reasonably pleased" with the speech.
But he added that it was short on detail.
"There was not much more he added on the plan," he said.
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Weather for Yorkshire
Saturday 26 May 2012
Today
Sunny
Temperature: 9 C to 21 C
Wind Speed: 17 mph
Wind direction: East
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Sunny
Temperature: 9 C to 22 C
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