Monday, April 27, 2009

Japan to boost Economy!

Japan, the technically sound nation, prepared to unveil details of a $150 billion plan to boost its economy, but weak corporate earnings and trade flows raised fresh doubts about growth revival. World stocks fell for a third straight day, while safe-haven government bonds gained. Governments and central banks around the world have been pumping money into the financial system and wider economy to try to free up frozen credit markets, rekindle spending and restore shattered investor sentiment.

Aluminium producer Alcoa Inc kicked off the latest U.S. earnings season with a second consecutive quarterly loss, while data from Japan, Germany and France showed a further weakening in global trade as recession takes hold. Policymakers from the Federal Reserve and European Central Bank also struck a cautious tone, dampening recent optimism that a $1.1 trillion stimulus package agreed by world leaders earlier this month might lead to a quicker economic recovery.

Japan is expected to detail an extra budget for the year to March 2010, including spending of $150 billion aimed at reviving growth. But the jury is out on how effective the spending will be.
The U.S. Federal Reserve's efforts to boost consumer lending suffered a setback as investors requested just $1.7 billion in loans to buy asset-backed securities, barely a third of the amount sought in the March debut of the plan.

Stock markets have rallied over the past month on hopes all the stimulus measures will bear fruit, but there have been few signs of improvements in company results so far.After Alcoa's gloomy update, Japanese electronics maker Sharp doubled it loss estimate for the year just ended, while German carmaker Daimler forecast a "considerable" drop in revenue this year and a big first-quarter loss.The downturn has pushed some household names to the brink.

Some analysts and policymakers fear the failure of a company as big as GM could have dire repercussions for the broader economy, after state bailouts of banks have shattered confidence in the financial system.European Central Bank executive board member Juergen Stark warned this confidence would take time to return.


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