Conflicting news about global economy baffles analysts

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From Fazle Rashid
NEW YORK, May 12: Conflicting news about the state of global economy is confounding the analysts and the market watchers. Continuing crisis still bedevils the US budget projections and its domestic agenda while the Organization for Economic Cooperation and Development (OECD) sees signs of a "pause" in the global economic slowdown in some major countries.
The US budget deficit has been revised upward. The budget offices revised deficit projections bringing the expected shortfall this fiscal year which ends Sept 30 to $1.84 trillion from a February projection of $1.75 trillion. For the 2010 fiscal year, the new estimate is $1.26 trillion up from $ 1.17 trillion, the New York Times (NYT) reported today.
This year's shortfall will be 12.9 per cent of the gross domestic product (GDP) and next year's deficit will be 8.5 per cent of the GDP. The deficit projections are the highest in more than 60 years, NYT said.
In a separate development, regulators in the US urged 10 big banks to raise $75 billion in additional capital as a buffer against more economic turmoil. Banks including Wells Fargo, Morgan Stanley and Bank of America have started to raise new capital by issuing new common stock and bonds.
Meanwhile, Goldman Sachs, which has produced many financial wizards has agreed to settle claims that the bank had unfairly and deceptively took part in lending practices involving subprime mortgages.
Ford Motors, only US automakers, surviving without government bail-out is set to raise $2 billion to beef up its capital base.
In Asia, Chinese banks lending slowed steeply in April because of fears that loans growth had been excessive and could pave the way for loans of deteriorating quality, so possibly creating a new round of assets bubbles. China's state owned banks gave out $85.2 billion in new loans last month.
In yet another development, AIG, the world's biggest insurance company, expressed concern over rampant criticism that could destroy its value. AIG chief executive Edward Liddy is set to appear before a Congressional committee.