U.S. Asks Japan and Europe to Shell out for Financial Crisis

With no end in sight to the current economic crisis, the U.S. has already notified Japan, Germany and the U.K. to draw out rescue plans to save the troubled banks within their borders, the Washington Post reports. With all of the complicated ties of the world’s banks, the United States government’s inability to solve the financial crisis on its own has become a global concern. The bailout plan that the U.S. announced last week will cost approximately $700 billion, even more than the cost of the Iraq War, leaving a huge mess for the next president to clean up.

The U.S. Department of Treasury handed the two and half page bailout plan to the Congress last Friday. It was made clear then that only American financial institutions would receive aid, but the Department of Treasury has since changed its initial statement. In the brief introduction of the plan released last Saturday night, there were suggestions of foreign companies possibly also receiving aid.

The introduction to the bailout plan clearly stated that the “qualifying financial institutions be businesses of considerable stature within the U.S.” However, After the Secretary of the Treasury Henry Paulson discusses the matter with Chairman of the United States Federal Reserve Ben Bernanke, there is a possibility that the range of qualifying businesses will be expanded to insure more efficient stabilization of the global market.

Request for Japan, Germany and England to Carry out Similar Plan of Action

According to the Washington Post, the Department of Treasury ultimately decided to directly contact foreign governments. The U.S. government has already requested similar bailout plans from Japan, Germany, England and other countries, in a push to resolve the issue of bad assets.

When asked by the English news source Reuters, Washington officials confirmed that the U.S. is currently holding discussions with officials from two foreign countries. An anonymous English banker stated that his bank has been in contact with American banks, testing the theory of “a global outcry to solve a global issue.” The European Central Bank refused to comment.

The Department of Treasury will buy the foreclosed assets at the lowest price. The plan leaves room for future clauses regarding bad assets, and doesn’t eliminate the possibility of the purchase of foreign assets. The Department of Treasury can either sell the assets or hold them until they expire. The cash from the sale of the assets, including any net profit, will go into the Treasury.

Deficit Constitutes 6% of Economy–Highest Since Reagan Administration

The plan laid out by the government costs approximately $700 billion, more than the $600 billion spent on the Iraq War. It is not currently clear how this plan will influence the budget, but experts estimate that when the next president steps into office, the deficit could constitute roughly 6% of the American economy, the highest since the Reagan administration.

If the Senate decides to pass the plan, it can be expected to be implemented by the end of this week. However, House Financial Services Committee chairman Barney Frank states that the additional clauses requested by Democratic Congressmen will become the most debated issue. Speaker of the House Nancy Pelosi states that the plan must take into consideration the majority of the population and that Democratic Congressmen will do more to promote additional clauses to the plan to stimulate the economy.