Obama sees 'pillars' of recovery in place this year: report

By AFP

July 15, 2010 Updated Mar 8, 2009 at 1:01 AM CDT

President Barack Obama expects to have "all the pillars in place" this year for a US economic recovery while avoiding the need for new bailout funds for struggling financial firms, he said in an interview.

"Our belief and expectation is that we will get all the pillars in place for recovery this year.... We have confidence that working with Congress we can get the pillars of recovery in place," the president told The New York Times.

Obama expressed confidence he would not have to ask lawmakers for new bailout funds, beyond the 250-billion-dollars foreseen for financial institutions in the current budget.

His comments come amid concern that government spending, which has ballooned in a bid to stem the crisis, will result in major long-term economic damage.

"We think the 250-billion-dollar placeholder is a pretty good estimate. We have no reason to revise that estimate that's in the budget," Obama said.

When asked if he would allow a major institution to fail and whether he would need more bailout funds, Obama said: "I think people can be assured that we'll do whatever is required to keep that from happening."

But Obama warned that even with measures in place the timeframe for pulling the United States out of its current economic funk would depend on global coordination and regions such as Europe dealing with structural "weaknesses."

"How long it will take before recovery actually translates into stronger job markets and so forth is going to depend on a whole range of factors including our ability to get other countries to coordinate and take similar actions," he said.

"Part of what you're seeing now is weaknesses in Europe that are actually greater than some of the weaknesses here, bouncing back and having an impact on our markets."

Obama's remarks come ahead of a key meeting of leaders from 20 of the world's most industrialized nations, that will take place in London in early April.

Members of the G20 will try to piece together a coherent policy to soften ossified credit markets and spur consumer confidence.

Eurozone countries have been criticized for their failure to forge a common approach to the global economic crisis which has shaken some eastern and central European economies dependent on over-leveraged investors who are now in retreat.

"We are going through a wrenching process of de-leveraging in the financial sectors -- not just here in the United States, but all around the world -- that have profound consequences for Main Street," Obama said.

The current malaise presented "a very complex set of problems" that go beyond short-term measures to nationalize banks or leave them to fend for themselves, he added.

"What I'm focused on is fixing the underlying economy. That's ultimately what's going to fix the markets.

"Some folks who would love to see us artificially prop up the market by just putting in more taxpayer money," he said.

"In the short term that could make bank balance sheets look better, you know, make creditors and bondholders and shareholders of these financial institutions feel better and you could get a little blip. But we'd be in the exact same spot as we were six, eight, 10 months from now."

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