Obama bet the banking sector and at building trust Fiscal Order

Obama bet the banking sector and fiscal order to build trust Buenos Aires, Argentina February 24, 2009 Yesterday was hectic lived another day in the United States. And if it was busy in U.S. markets, was also in global markets. Fear returned to take over operations and so that the minimum breaking markets continued. The U.S. economic prospects continue to worsen. The Economist Intelligence Unit (EIU), the U.S. economy will contract by your intake of around 2.5% for 2009. Undoubtedly, it turns out to be a fact clearly indicative of the depth has reached the crisis. How could it be otherwise, Wall Street closed at its lowest level in the last 12 years to break the Dow Jones the floor of the 7,200 points (down 3.4%), closing at 7114.78 units. The U.S. banking sector made headlines again. The rumors of nationalization were the order of the day. One version indicated a possible increase in state participation in Citi (NYSE: C), which could reach 40%. Also the Bank of America (NYSE: BAC), was identified as a possible beneficiary of contributions from the U.S. Treasury.

In this context, Citi's shares ended the day with a rise of 9.74%, while Bank of America 3.17% did above. But the U.S. government wanted to bring calm to the markets to ensure that banks remain strong enough and have a sufficient capital base to not require public assistance. The U.S. Treasury has gone one step further and not only rely on the strength of the U.S. banking system, but already thinking about the recovery of the same capacity to generate credit. In this sense, the U.S. government confirmed that it will give you the liquidity that the banking system needs to revive the credit markets during the crisis, in a sign of support in a climate of increasing instability in a joint statement from the Treasury Department Federal Reserve (Fed) and other government agencies in charge of the U.S. economy read: "A strong financial system is necessary to facilitate sustainable economic recovery and wide?. The U.S. government claims that the banks start lending, but institutions still remain fearful not only by the state of their balance sheets but also by the adverse economic environment that implies a high risk.

This will surely lead to increasing pressures for the wheel to start rolling again credit. Since the U.S. government, has done everything possible so that the context is beneficial for the restoration of credit. While the U.S. government relies on the soundness of the banking sector, tomorrow will be a stress test performed at the main entities of the country to assess their vulnerability to a possible worsening of the crisis. If banks fail to successfully pass the stress test, this may have a positive impact on market confidence. Is that if banks show be able to cope with a possible worsening of the crisis, they could start thinking about leaving behind the crisis and focus on returning to your business is to generate funding. While awaiting new signals from the U.S. banking sector, President Barack Obama has made an announcement that sought to create confidence about economic policy in the medium term. Obama sought to bring clarity and confidence to the markets by announcing its target of reducing by 50% the U.S. fiscal deficit by the end of its mandate.

The fiscal result of the previous year closed with a red $ 1.3 billion. The fiscal deficit and current account deficits faced by the U.S. economy is threatening the global leadership of it to weaken its macroeconomic fundamentals. With reduced public sector dissaving will also reduce the current account deficit, as long as the private sector maintain its levels of consumption and savings. Obama knows that both the health of the banking system as the management of fiscal accounts are key to restoring confidence in markets. The banking sector with solid display clears the fears of new episodes of crisis, while making more sustainable economic recovery. That the U.S. government is concerned to keep under control the fiscal deficit is positive for the U.S. economy because it points to strengthen their macroeconomic fundamentals clearing possible future episodes of crisis that may result from the unsustainability of equilibria. Since assuming the U.S. government, Barack Obama has acted to events and signals to try to rescue the U.S. economy out of recession. Can a successful outcome in the short term?