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Pros Say: Bank Plan 'Bribes' Buyers with Cheap Financing

CNBC.com
Wednesday, 25 Mar 2009 | 10:20 AM ET

Global stocks were mixed on Wednesday as the enthusiasm over the U.S. Treasury's plan to rid banks of up to $1 trillion in toxic assets was tempered by investors' second thoughts over how successful it could be. Experts tell CNBC the U.S. needs to spend big now to revive the economy.

US Govt Needs to Spend Big Now

The U.S. government needs to spend big now to try and stabilize the financial system and revive the economy, says Benjamin Pedley MD & investment strategist at LGT Investment Management (Asia). He assesses its budgetary situation.

US Rescue Plan Won't Be Successful

Treasury Secretary's Timothy Geithner's rescue plan will be unsuccessful, believes Douglas Holtz-Eakin, president at DHE Consulting. He tells CNBC that the plan is "bribing" buyers with cheap financing.

Barack Obama
AP
Barack Obama

Obama's Faith in Dollar Strength

Obama's belief that "the dollar is extraordinarily strong right now" is absolutely right at the moment, says Benjamin Pedley MD & investment strategist at LGT Investment Management (Asia).

Dollar to Trek Higher

Gary Shilling, president at A. Gary Shilling and Company, says the idea of a global currency is long way off and the dollar will remain the default safe-haven and reserve currency at a time of international stress. He talks to CNBC about the greenback's outlook and the upcoming G20 summit.

Dollar to Remain Under Pressure

Following the announcement of the U.S. toxic asset plan, the dollar is likely to remain under pressure in the short term, predicts Ulrich Leuchtmann, head of FX research at Commerzbank.

Obama Needs to Dial Down Rhetoric

Obama is going to have to dial down the rhetoric a little bit if he wants to get the hedge funds on board to facilitate the toxic asset plan, says Benjamin Pedley MD & investment strategist at LGT Investment Management (Asia).

Bank Plan Positive for Larger Institutions

Andrew Marquardt, senior bank analyst at Fox Pitt Kelton says larger institutions will most likely benefit from the government's bank plan because they have been more aggressive in writing down problem assets.

Time to Make Changes in Regulations

Gary Shilling, president at A. Gary Shilling and Company, says a problem with government regulation is that if it is overdone, it stifles innovation and risk-taking. He discusses the likelihood Washington will be given power to wind down troubled non-bank financial institutions.

The Impact of Corporate Bond Buying

"Corporate bond buying will have very little impact on the markets. I hope it can increase liquidity a little bit, but I don’t think it will not give us much performance," Willem Sels from Dresdner Kleinwort said.

Yen Looks Risky

Korea, Korean Flag
CNBC.com
Korea, Korean Flag

Dwyfor Evans, vice president and senior macro strategist at State Street Global Markets, says there are tangible signs that markets may have bottomed and started to turn the corner. He also tells CNBC why the yen is one of his least favored currencies for the moment.

S.Korea Will Face Recession

South Korea will fall into a recession this year, warns Daniel Soh, regional economist & FX strategist at Forecast.

S. Korea's Extra Spending Won't Affect Ratings

South Korea's pledge to boost its budget by another $13 billion is not going to affect its sovereign rating, says Thomas Byrne, senior VP & regional credit officer for Asia & the Middle East at Moody's Sovereign Risk Group.

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