U.S. Need USD1, 2 T to Restore Market Confidence

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WASHINGTON - U.S. financial system still requires at least a cash equity between USD1 to USD1 trillion, 2 trillion to restore market confidence and generate liquidity in the credit world.

"Loans provided not the solution, as well as long-term credit is not the solution. Only direct equity injection that can be a solution," said analysts from Friedman Billings Ramsey Paul Miller, as quoted from Reuters, Thursday (20/11/2008).

A total of eight financial companies, namely Group Inc. Citigroup Inc., Morgan Stanley, Goldman Sachs Group Inc., Wells Fargo & Co., JPMorgan Chase & Co., American International Group Inc., Bank of America Corp., and GE Financial is a company that is the need of cash assistance.

In the U.S. financial system has a debt of USD37 billion. while the assets of eight companies is USD12, and only 2 trillion of equity has USD406 billion, or 3.4 percent.

For companies that need it as much USD1-1, 2 trillion to restore the balance sheet to a solid return. So it can begin to give credit again, to restore trust them to provide short-term funding, and to prevent liquid assets in them.

Since 2007, Wall Street is already experiencing "wallop". Starting with sub-prime mortgage crisis and the crisis spread to credit, to occur pelambatan economic growth in the world.

The U.S. government needs to take action in order mengantisapi this. For example, each announced a dividend from the bank and change the funding system to collect more equity credit to function more visible.

Taken from Okezone.com