.jpg){kind=small}
The United States will emerge stronger from the economic slump, President Barack Obama told Congress, but he tempered his message of hope with a warning that America faces a "day of reckoning" for its past excesses.
Obama's first presidential address to lawmakers followed an assurance by Federal Reserve Chairman Ben Bernanke that battered U.S. banks should be able to weather the steepest downturn in decades without being nationalised.
Wall Street cheered the Fed chief's belief that bank shareholders would not be wiped out, with the Standard & Poor's 500 rallying 4 percent despite record plunges in U.S. house prices and consumer confidence..
Asian shares also rose and stocks in Europe were set up open with gains of over 1 percent.
Obama sought to revive the spirits of Americans weary of recession and anxious to see an end to a financial nightmare that has brought some of the country's biggest banks and brokerages to their knees.
"While our economy may be weakened and our confidence shaken, though we are living through difficult and uncertain times, tonight I want every American to know this: We will rebuild, we will recover," Obama said.
"And the United States of America will emerge stronger than before," he insisted in a prime-time televised address to a joint session of the Senate and House of Representatives.
Obama spoke against a background of unremittingly grim economic news from across the globe.
Japan on Wednesday reported its largest trade deficit ever as exports nearly halved in January from a year earlier, providing further evidence of how the global financial crisis is crippling Asia's trade-dependent economies.
"Exports to Asia, particularly to China, are tumbling at about the same pace as shipments to the United States, signalling that even China's economy may be shrinking," said Takeshi Minami, chief economist at Norinchukin Research Institute.
"We don't see any signs of a pick-up in the Japanese economy in the near term. The economy will gradually worsen further."
QUESTION OF CONFIDENCE
Japanese stocks rose, however, with the Nikkei average gaining 2.65 percent after the Nikkei business daily reported that the government is considering buying stocks directly from the market using public funds.
A weaker yen, which is good for exporters, also encouraged stock market investors, as did the rally on Wall Street.
Despite the bounce, many market-watchers are not yet convinced prices have found a floor.
"Unfortunately, at the moment, the policymakers can't get ahead of the downward spiral in asset prices and, as asset prices drop, the real economy is falling even faster," said Sean Darby, Asian equity strategist for Nomura.
"We are in a death spiral at the moment where the policymakers need to do some very unorthodox actions to reverse the cycle," Darby told Reuters in Beijing.
Investors showed little reaction to Obama's speech, in which he said he had identified $2 trillion in costs that can be cut over the next decade as he seeks to offset big fiscal spending aimed at reviving the economy.
The president toned down expectations that his young administration's rescue efforts would yield quick fixes. The Democrat also took a dig at his Republican predecessor, George W. Bush, for the country's economic plight and bloated public debt, saying the "day of reckoning" had arrived.
"Confidence is a big issue right now. If it continues to stay this way, the world could plunge into a recession, so giving hope is the best Obama can do," said Song Seng Wun, an economist at CIMB in Singapore.
The Conference Board, an industry group, said on Tuesday its U.S. consumer sentiment index fell to the lowest in its 42-year history, while German business confidence hit its lowest level since reunification.
BERNANKE REASSURES
Wall Street rallied in the teeth of all the bad news after Bernanke said that he saw no reason to destory the "franchise value" of major banks by taking them into public ownership.
"That obviously speaks to the idea that the administration does not seem to want to nationalise banks and that's going to be viewed as a positive for the banks and that's going to help the overall market firm up a bit as well," said Richard Sparks, senior equities analyst at Schaeffer's Investment Research in Cincinnati.
Bernanke's comments followed reports that the U.S. government was discussing taking a bigger stake — perhaps as much as 40 percent — in ailing financial giant Citigroup and injecting more cash into insurer AIG.
"What we can do is make sure they have enough capital to fulfil their function and at the same time we exert adequate control to make sure that they are doing what is necessary to become healthy and viable over the longer term," the Fed chief told the Senate Banking Committee.
