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Japan passes economic stimulus plan as stocks slump
2008-10-16
Japan's parliament on Thursday enacted an 18-billion-dollar emergency spending plan to stimulate Asia's largest economy as Prime Minister Taro Aso said troubled markets also want stronger US action. The 1.81-trillion-yen plan includes measures to help consumers, companies and farmers cope with high fuel costs and a credit crunch. It was approved by the opposition-led upper house soon after Tokyo's Nikkei stock index suffered its biggest loss in two decades, plunging more than 11 percent Thursday as fears of a global recession grew. Aso said stocks were falling because investors believe a US banking rescue plan does not go far enough, with a bottom to the Tokyo stock market not yet in sight. "I think market players are selling because they feel the capital injections are still insufficient. Despite some positive reaction, the market is calling for more because it was not enough," he said in parliament. The US government said Tuesday that it would pump as much as 250 billion dollars into banks and offer new guarantees to help restore credit flows, as part of a 700-billion-dollar US bank bailout announced last month. Japan announced measures aimed at supporting its stock market earlier this week, in addition to the extra budget, which is part of an 11.7-trillion-yen package announced in August. The rest consists mainly of lending-related measures. The lower house approved the bill last week and the opposition went along with the plan as part of its push for Aso to call snap elections. The premier, who got off to a shaky start after replacing Yasuo Fukuda last month, has said he will focus on boosting the economy before calling polls. A supporter of government spending to boost the economy, Aso has pledged to work on a second extra budget, setting aside efforts by earlier premiers to reduce Japan's public debt, which is the highest among industrialised nations. Japan's economy suffered its worst contraction in seven years in the second quarter of this year and many analysts believe it is already in recession, dragged down by the US economic slump and the global financial crisis. Japan, current head of the Group of Eight rich nations, said Thursday that it was ready to host a summit on the financial crisis, but would not be offended if the meeting took place elsewhere. Leaders of the G8 said in a joint statement Wednesday they would soon hold a special summit on the worldwide financial meltdown. "Japan has made its position clear that the Japanese government is ready to hold the G8 summit at any time," said Chief Cabinet Secretary Takeo Kawamura, the government's spokesman. But he added: "Where to hold the meeting isn't a matter of each country's pride. We have to come up with the best place by looking at the big picture."
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