THE FINANCIAL CRISIS

London: Massive stimulus plans to drive the world out of recession took center stage on Wednesday with the European Union considering a 200 billion euro boost for its economy. The move came on the heels of an $800 billion credit market bailout from the US Federal Reserve. The European Commission approved a package aimed at giving the sagging European economy a sharp, temporary boost with a 200 billion euro ($260 billion) spending plan across the 27-nation bloc, an EU source said. The plan, higher than initially thought, calls for a targeted and temporary fiscal stimulus of 1.5 percent of EU gross domestic product. National measures would account for around 170 billion euros, or 1.2 percent of GDP, and EU and European Investment Bank budgets around 30 billion euros. The Commission wants the European Union’s 27 member countries to unite on a two-year dash for growth, even if it means that it comes at the cost of breaking the region’s national deficit targets. — Reuters

Volcker to head economic advisers

CHICAGO: President-elect Barack Obama chose former Federal Reserve Chairman Paul Volcker Wednesday to head a new White House panel to help create jobs and bring stability to the ailing financial system. Volcker, 81, will head the President's Economic Recovery Advisory Board. The board's top staff official will be Austan Goolsbee, a University of Chicago economist, Obama said at a news briefing. Volcker is no stranger to economic crises. He became Fed chairman in 1979, a time of high Inflation and high unemployment. He helped tame inflation by raising interest rates, a move that helped plunge the economy into recession. He was later credited with reviving the economy by getting inflation under control. Volcker served as Fed chairman until 1987. He returns as an adviser with the nation facing increasing unemployment, a growing federal budget deficit and a financial system in turmoil. It was Obama’s third news conference in as many days dealing with the economy. On Monday, he announced New York Federal Reserve President Tim Geithner as his treasury secretary. — AP

AIG CEO to get token $1 salary

CHARLOTTE: American International Group Inc. said Tuesday it is limiting how much it pays its top executives, including granting a $1 salary for this year and the same for 2009 to its Chief Executive Edward Liddy. The decision is one of many broader moves made by the troubled New York-based insurer, which has been under pressure to restrict executive pay since accepting billions in Government assistance to save it from collapse. AIG has received about $150 billion so far, more than any other company. It was once the world’s largest insurer with customers around the globe, and regulators feared the possible effect an AIG collapse would have had on the world’s financial system. The company said there will be no 2008 annual bonuses and no salary increases through 2009 for AIG's top seven officers and no salary increases through 2009 for the 50 next-highest AIG executives. In addition to his $1 a year salary, Liddy will be getting an unspecified amount of stock. “We believe these actions demonstrate that we are focused on overcoming our financial challenges so AIG can return value to taxpayers and shareholders,” Liddy said. — AP

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