US tries several options but fails to get early results

FE Team | Published: December 04, 2008 00:00:00 | Updated: February 01, 2018 00:00:00

From Fazle Rashid
NEW YORK, Dec 3: World in recession proclaims the shoulder heading of a seven column story in a reputed paper today. For good or bad Bangladesh, as its policy planners say, is not a part of this world. How could a country in this era of interdependence remain unscatched during this turmoil has bemused the Bangladeshi diasporas here in North America?
Bangladeshi diasporas here have been badly hit by the economic slowdown This is borne out by the fact that order placed with the groceries for "korbani" this year has witnessed a steep fall. The remittance -- there is nothing to be alarmed about as yet -- is showing a downward trend, said people in the business.
Bangladeshi labour force from the Middle East and Malaysia could soon start returning home with companies there announcing redundancies and delaying and suspending development projects with the price of petrol going down below $50 a barrel from $150 a barrel in July this year.
The US , mightiest and the wealthiest nation in the world, has not yet been able to come to terms with continual decline in its economy. It has tried several options. But nothing appears to be working.
The US government is preparing another rescue package totalling $800 billion to " stem the financial crisis ". The first package of $700 billion is alleged to be ridden with reports of financial improprieties. The bailed out companies, banks and insurance companies, have used the money to pay their executives rather than using it for easing the credit crunch.
The Government Accountability Office (GAO) said the Treasury has yet to develop policies to make sure the troubled assets relief programme (TARP) is achieving its goals or that banks receiving government money are complying with restrictions on executive compensation and dividend payment, a reputed paper in a story said.
The US Federal Reserve announced yesterday that it is extending the period of the three emergency lending programmes designed at thawing the credit market in the light of the continuing turmoil in the financial system. The move comes a day after Fed Chairman Ben Bernanke acknowledged that the economy is under " considerable stress " The extended period will run until April, 2009.
The independent watchdog National Bureau of Economic Research (NBRE) said that the 73-month economic expansion that started in November 2001 has ended in December 2007. The question that everyone is asking is how long and how severe this recession will be. A growing body of gloomy economic data and indicators including the strains felt by the manufacturing sector is raising fears that the downturn globally is getting worse. The jobs report has been negative every month since January. The decline is accelerating. The jobless rate has increased to 6.8 per cent, highest since 1930.
The US federal budget deficit will run into well beyond $1.0 trillion this fiscal. This is equal to the US defence budget and Medicare expenses. The US treasury secretary Henry Paulson who will be travelling to China urged Beijing to strengthen its currency Renminbi, amid deepening fears that a plunge in its currency could bring further disaster for the US. China is holding huge amount of the dollar-denominated US treasury bonds.
President-elect Obama has added his weight to the call. Obama during the campaigning had warned that he would employ all diplomatic means to force China to end manipulation of its currency that provided China a sharp edge in its export trades. China denies currency manipulation.
Three former presidents Ronald Reagan, Bill Clinton and George Bush indulged in China bashing during electioneering but once in office they "adopted a more collaborative line"