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Shares fall after US banking plan Shares fall after US banking plan
(about 1 hour later)
Asian investors have given the $1.5 trillion (£1.02 trillion) US bank bail-out plan a muted response, following sharp falls overnight on Wall Street. Global investors have given the $1.5 trillion (£1.02 trillion) US bank bail-out plan a muted response, following sharp falls overnight on Wall Street.
Analysts says there is scepticism over whether the proposal will work, and worries over both a perceived lack of detail and the sums of money involved.Analysts says there is scepticism over whether the proposal will work, and worries over both a perceived lack of detail and the sums of money involved.
At the core of the plan is a new $500bn public-private fund being created to absorb remaining toxic bank assets. At the core of the plan is a new $500bn fund to absorb toxic bank assets.
Hong Kong's Hang Seng was down 3.2%. The Dow Jones fell 4.6% on Tuesday. The UK's FTSE 100 was down 0.4% in early trading. America's main Dow Jones slumped 4.6% on Tuesday.
"This is not a clear-cut plan," said analyst Bucky Hellwig."This is not a clear-cut plan," said analyst Bucky Hellwig.
Mr Hellwig, who works for Morgan Asset Management, added that it wasn't "what investors are looking for", and that the package was "convoluted".Mr Hellwig, who works for Morgan Asset Management, added that it wasn't "what investors are looking for", and that the package was "convoluted".
Dow slumpDow slump
By midday in Hong Kong, the Hang Seng index was down 3.2%, or 442.89 points, at 13,438. In early Wednesday trading in London, the FTSE 100 was 0.4%, or 18 points, lower at 4,195, while France's Cac had lost 1%.
Hong Kong's Hang Seng index was down 431 points, or 3.1%, in afternoon trading at 13,450.
Investors want clarity, simplicity, and resolution. This plan is seen as convoluted, obfuscating, and clouded James Ellman, Seacliff Capital Q&A : Bank bail-out planInvestors want clarity, simplicity, and resolution. This plan is seen as convoluted, obfuscating, and clouded James Ellman, Seacliff Capital Q&A : Bank bail-out plan
Meanwhile, the top index of Australian shares ended down 10.3 points, or 0.3%, at 3,418. The Japanese stock market was closed for a public holiday. Meanwhile, the top index of Australian shares closed down 10.3 points, or 0.3%, at 3,418. The Japanese stock market was closed for a public holiday.
The falls in Asia came after the US Dow Jones index slumped 382 points, or 4.6%, to 7,889 on Tuesday. The falls came after the US Dow Jones index slumped 382 points, or 4.6%, to 7,889 on Tuesday.
Mr Geithner said the new bank bail-out package was vital as "critical parts of our financial system are damaged".Mr Geithner said the new bank bail-out package was vital as "critical parts of our financial system are damaged".
"Instead of catalyzing recovery, the financial system is working against recovery, and that's the dangerous dynamic we need to change," he added."Instead of catalyzing recovery, the financial system is working against recovery, and that's the dangerous dynamic we need to change," he added.
'Critical aid''Critical aid'
The new plan is aimed at restoring confidence in the damaged financial system and restarting bank lending.The new plan is aimed at restoring confidence in the damaged financial system and restarting bank lending.
THE KEY AIMS OF THE PLAN Absorbing toxic assets from a weakened banking systemUnfreezing the credit marketSoftening the housing crisisTransparency and accountabilityTHE KEY AIMS OF THE PLAN Absorbing toxic assets from a weakened banking systemUnfreezing the credit marketSoftening the housing crisisTransparency and accountability
The key question now is how eager the private sector will be to participate both in the new fund to absorb toxic assets and the new Federal Reserve lending programme, which will be expanded to $1 trillion from $200bn to help banks lend more.The key question now is how eager the private sector will be to participate both in the new fund to absorb toxic assets and the new Federal Reserve lending programme, which will be expanded to $1 trillion from $200bn to help banks lend more.
Mr Geithner said the new bank bail-out plan should unfreeze the credit market, strengthen banks and "provide critical aid for homeowners and for small businesses".Mr Geithner said the new bank bail-out plan should unfreeze the credit market, strengthen banks and "provide critical aid for homeowners and for small businesses".
"And as we do each of these things, we will impose new higher standards for transparency and accountability," he added."And as we do each of these things, we will impose new higher standards for transparency and accountability," he added.
Analyst James Ellman of Seacliff Capital said investors were disappointed, as they had wanted "clarity, simplicity and resolution".Analyst James Ellman of Seacliff Capital said investors were disappointed, as they had wanted "clarity, simplicity and resolution".
"This plan is seen as convoluted, obfuscating, and clouded," he added."This plan is seen as convoluted, obfuscating, and clouded," he added.
Others say that the plan is not perfect, but in general they agree with many of its proposals.Others say that the plan is not perfect, but in general they agree with many of its proposals.
"I think the idea of more or less buying back some of the debt, monetizing it, is a good idea. I think that's probably a good move," said Carl Birkelbach, head of Birkelbach Management."I think the idea of more or less buying back some of the debt, monetizing it, is a good idea. I think that's probably a good move," said Carl Birkelbach, head of Birkelbach Management.
Meanwhile, the US Senate has backed an $838bn economic stimulus package which will now have to be reconciled with the House of Representatives version.Meanwhile, the US Senate has backed an $838bn economic stimulus package which will now have to be reconciled with the House of Representatives version.
Are you in the US? Do you support the plan? Will it make a difference? You can send us your views using the form below:Are you in the US? Do you support the plan? Will it make a difference? You can send us your views using the form below:
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