| Bailout package |
The US government’s drive to stablise the markets took the shape of a bailout package worth $700 billion. The money was to be used for emergency lending to troubled financial institutions. The Obama transition team is considering a second stimulus package that could be in the region of $850 bn.
After initial hiccups, (Treasury Secretary Paulson wanted to buy the toxic debts of the financial institutions, a move which was severely criticized, among others, by Nobel Laureate Paul Krugman. Later the plan was modified to buying stake in the institutions in return of funding) the government decided to follow the UK model of doling out money - stake in return of funds - but it was for the financial sector only.
The Chinese government on its part announced a stimulus package of $586 billion.
The Eurozone countries announced a stimulus package of $2 trillion to revive the economy. France announced a plan of 320 billion euro, while Germany announced a €500 billion plan. Jose Luis Rodriguez Zapatero, of Spain announced a €100 billion of guarantees for new debt issued by commercial banks in 2008.
Japanese Prime Minister Taro Aso launched a massive stimulus package of Y23 trillion yen (GBP168 bn). It also passed a record budget this year of Y88.5 trillion, or $980.6 bn, to revive an economy that is fast sinking into recession.
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