Bush urges patience over economy

President George Bush says the US rescue plan needs time to work

US President George W Bush has called on worried Americans to trust in the government's series of interventions to fight the crisis in the banking system.

Global stock markets have behaved erratically despite a multi-billion dollar rescue deal to restore calm.

Mr Bush defended his decisions saying credit markets took "a while to freeze up" and would take a while to "thaw".

He spoke as figures released in the US suggested that the construction of new homes was at its lowest in 17 years.

According to the US commerce department, the building of new homes fell by more than 6% last month and was at its lowest level since the recession of 1991.

I would oppose such measures under ordinary circumstances but these are not ordinary circumstances George W Bush

The BBC's David Willis in New York says the figures are significant, not least because housing - particularly losses stemming from mortgage defaults - lies at the heart of the current economic crisis.

News of the fall in house construction, when coupled with falling consumer spending and reports of rising job losses, is also seen as further evidence that the world's largest economy may well be heading for recession, our correspondent says.

Cash injections

In a further attempt to restore confidence to business, President Bush made a major speech at the US Chamber of Commerce headquarters in Washington.

Mr Bush, a free marketeer by instinct, defended his level of government intervention saying if he had not acted the hole in the financial system would have grown larger.

Losses stemming from mortgage defaults are at the heart of the crisis

"I would oppose such measures under ordinary circumstances," he said, "but these are not ordinary circumstances."

He said that the American people could "be confident" that the measures were "big enough and bold enough to work".

The Treasury has said it wants to implement its $700bn financial bail-out plan quickly.

It has also announced plans to inject $250bn into many of the nation's banks, including JP Morgan Chase, Goldman Sachs and the Bank of New York Mellon Corp.

The president also spoke of the co-ordinated effort with Europe in tackling the global economic crisis, saying: "We're determined to overcome this challenge together."

Mr Bush will meet his French counterpart Nicolas Sarkozy and the European Commission chief, Jose Manual Barroso, at Camp David in Maryland this weekend.

Their talks are intended to pave the way for a global summit on overhauling the financial system.

In other developments:

• European shares indexes fluctuated between small losses and gains of more than 3%, as traders took heart from the gains on Wall Street on Thursday
• Credit rating agency Fitch downgraded Hungary's outlook from "stable" to "negative" as it considers that the global financial crisis has increased the country's credit risk
• Oil prices rose above $72 a barrel on expectations that Opec would decide to cut production at its upcoming meeting
• German bank shares were helped by news that the German parliament had passed a 500bn euro ($672bn; £389bn) bank rescue package

Original here