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US authorities set to unveil $1 trillion bailout package

While initially the Obama administration was well received by the US public there were signs over the last few days that issues with ongoing rescue packages and AIG bonus payments in particular had concerned members of the public. However, fresh from criticism from Congress last week Tim Geithner, the US Treasury Secretary, is set to unveil a $1 trillion bailout package for the US banking system. This is the first Obama instigated and Obama built rescue package since his inauguration and is set to be well received by the US markets.

It appears that while up to $1 trillion will be available to buy back toxic assets, the government has pulled in a number of private companies, such as hedge funds and pension funds, to take up significant chunks of these toxic assets. The idea is that these assets will be exchanged for finance and this will increase liquidity in the overall market, as in the UK, and lead to more fluid money markets which should breed more confidence.

The indications are that Wall Street will react very positively at the open this afternoon although much emphasis will be put on the follow-through on the stock market as and when details are announced. This is probably a godsend for Gordon Brown who was looking for co-operation from around the world to try and refloat the worldwide economy.

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