U.S. President George Bush is defending his government's aggressive interventions in the financial crisis. He told a U.S. business group Friday the "measures of last resort" will ultimately restore the economy to stability. VOA's Kent Klein reports from Washington.
President Bush told the U.S. Chamber of Commerce, an organization of business leaders, his extraordinary measures to strengthen the financial system will work in the long term.
"The actions will take more time to have their full impact. It took a while for the credit system to freeze up, it's going to take a while for the credit system to thaw," said Mr. Bush. "These are decisive measures, aimed at the heart of our financial challenges, and they are big enough and bold enough to work. And the American people can be confident that they will."
The president said he would oppose such actions under ordinary circumstances, but he said these are not ordinary circumstances.
"People look at this crisis and say, 'Oh, it's only on Wall Street.' I don't think so. As a matter of fact, I know that if we had not acted, it was going to affect the American people directly," he added.
Stocks on Wall Street opened about 200 points lower, after Thursday's 401-point gain. The S&P 500 and the NASDAQ also started the day at least two percent lower. Part of the reason for Friday's early losses was a government report that says new home construction in the U.S. dropped by more than expected last month. Housing starts fell more than six percent in September, to the lowest level since 1991.
Mr. Bush said the U.S. is cooperating with nations around the world, and he plans to meet Saturday with French President Nicolas Sarkozy and other top officials to discuss the economy. Mr. Sarkozy is expected to push for a larger international summit on the financial meltdown by the year's end.
European stock prices were higher at midday. London's Financial Times index was up almost 2.5 percent. In Paris, the CAC-40 gained more than 2 percent. And the DAX in Frankfurt advanced almost 3 percent. Germany's parliament Friday passed a $675-billion rescue package for the country's financial markets, as part of a coordinated European bailout effort.
Tokyo's Nikkei index closed 235 points higher, a gain of more than 2.5 percent after Thursday's 1,000-point loss, the Nikkei's biggest drop in more than 20 years. Hong Kong's Hang Seng plunged 676 points Friday, nearly 4.5 percent.
Indian stocks tumbled due to fears of a global slowdown. The Sensex index in Mumbai dropped 5.7 percent.
Many Asian countries expanded guarantees on bank deposits this week, trying to assure savers that their banks will not be affected by the problems in Europe and the United States. Singapore and Malaysia offered protection to depositors on Thursday, following Australia, New Zealand, Indonesia and Hong Kong.