Obama victory met with calls for global action
U.S. President-elect Barack Obama stepped into his new role on Wednesday facing calls for urgent action to stem the global financial crisis as he was hit with gloomy news about U.S. jobs and the service sector.
A day after his historic election as America’s first black president, Obama heard a chorus of congratulations from around the world but also warnings about the creeping global recession that will crowd the top of his agenda along with the wars in Iraq and Afghanistan. [nN03331953]
World leaders expressed hope Obama could guide the international community while investors eagerly awaited an announcement on who would be selected as Treasury Secretary to oversee the $700 billion program to buy distressed assets and recapitalize wobbly financial institutions.
“The need for a seamless transition is greater than it has been in our adult political lifetime,” said William Galston, a former domestic policy adviser to President Bill Clinton.
“With two wars abroad and an international financial crisis going on, there cannot be a period in which the new administration is just getting up to speed,” Galston said.
Obama, who takes office on January 20, has proposed a new economic stimulus package to help revive the economy, which is still staggering from a mortgage crisis that left financial institutions overleveraged, undermined confidence, froze credit markets and transformed Wall Street low fee pay day loans.
Democrats in the U.S. House of Representatives planned their own stimulus proposal.
On the morning after the election, ADP Employer Services said U.S. private employers cut a larger-than-expected 157,000 jobs in October, while the service sector contracted sharply.
There was also stress overseas.
Germany’s cabinet on Wednesday agreed on a 50 billion euro ($64.22 billion) stimulus package for Europe’s largest economy that includes tax breaks and spending on infrastructure.
Italy will approve a plan to support banks next week, Prime Minister Silvio Berlusconi said, amid signals the European Commission has expressed a willingness for flexibility to increase fiscal spending.
Other European banks reported weak earnings.
NEW DEAL
“We need to change the current crisis into a new opportunity. We need a new deal for a new world,” said European Commission President Jose Manuel Barroso. “I sincerely hope that with the leadership of President Obama, the United States of America will join forces with Europe to drive this new deal.”
The Dow Jones Industrial average was down 3 percent in afternoon trading on worries about the weakening economy after European stocks closed down 2.2 percent.
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