Meltdown is leaving scars everywhere

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From Fazle Rashid
NEW YORK, November 19: The primary purposes of the $700 billion bailout package is to protect the US financial system from collapsing, said Treasury Secretary Henry Paulson in rejecting pleas to use the money to rescue the beleagured auto-industry facing the threats of closure or to help homeowners to avoid foreclosures. The rescue package was not intended to be an economic stimulus or an economy recovery package, the New York Times (NYT) quoted the treasury secretary as saying.
The auto-industry worldwide is seeking government assistance to remain in business. The latest in the round of appeals was heard from China. China's car industry is pressing the government to help it cope with a " jarring slowdown " After six years of booming business, the sales of cars in China were flat. The demand for Chinese cars in the United States is 14 million less than that of the previous year.
Besides Ford, GM and Chrysler -- the three giant US automokarers, the other car makers who desperately need cash infusion are BMW, Volkswagen, Opel. Europe's embattled car makers are seeking a soft loan of $51 billion in the face of the tumbling demand and scarce credit.
The US treasury will be poorer by $150 billion in loss of revenue from the car industry and three million jobs have been eliminated.
US treasury secretary Henry Paulson and the Fed reserve chairman Ben Bernanke, while testifying in the Congress, exuded optimism saying government actions have started to bear fruit. "We have been able to turn the corner in stabilising and preventing the collapse of the financial system. Credit markets are still strained but slowly showing signs of improvement. There are lots of works still to be done," the US government policy managers said.
The meltdown is leaving its scars everywhere. India's booming information technology and outsourcing sectors have been severely hit. Chindambaram, the finance minister put up a brave face stating India's growth rate would bounce back to 9.0 per cent in 2009, a claim which has been accepted with a grain salt by the market analysts. A top Indian business executive said, "the present global slowdown was the worst he had witnessed."
The Middle-Eastern nations where Bangladeshi workers have reaped a rich harvest not only for themselves but for the country as well by steady flow of remittance are feeling the pinch. Dubai which witnessed a decade of strong growth is now at the tail-end with declining economy, clogged credit markets and a collapse in the price of oil. Dubai is negotiating with the UAE government over loan facility that would make state funds available to companies as international sources of capital dry up.
Kuwait, another flourishing country is facing difficulties to calm down a volatile market. The government has instructed country's sovereign fund (government-backed fund) to set up a fund to prop up local equities as it tries to shore up confidence of the investors following demonstrations and stock market closure. Kuwait's stock market, the second biggest in the area lost a third of its value this year, despite infusion of $180 billion.
Meanwhile, the International Federation of Red Cross, famously known by its acronym Red Cross and Red Crescent Societies, world's largest humanitarian organisation is contemplating axing staff and shelving new projects as it was bracing for the slashing of aid contributions by recession-plagued donors.
It has launched an appeal for $221 million for 2009. The International Red Cross sounded a stern warning that the poor countries would soon be engulfed with the crisis of high food prices, job losses, falling revenues and steep decline in remittances on which they depend. The rich nations have perennially fall short of their pledges to raise aid spending to 0.7 per cent of their gross domestic product (GDP). The World Bank said already more than 100 million people across the globe have been driven into poverty.