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Jan 18: LARRY KANTOR on Barack Obama's rescue plans

Part 1, January 18 2009: Larry Kantor, head of research at Barclays Capital, says it may take some time for President Barack Obama to get the economic stimulus package through, with the most optimistic estimates for its passage by mid-February. Tax cuts in the form of reducing withholding taxes would be the quickest way to get economic stimulus into the US economy, and this would start affecting the economy by the end of March. The $800bn amount being expected it huge, it's about 5.5 per cent of US GDP. It is not enough because the fiscal stimulus package is not aimed at directly fixing the financial problems which continue to persist. In previous banking crises, it has been necessary to give banks time to earn their way our of the problems, rather than being saddled with assets that contrict their balance sheets and their ability to lend. Using money from the Troubled Asset Relief Programme may not be enough to fix the financial problems. Lower mortgage rates is also very important, and the Treasury could use the low funding rates available now to provide cheap mortgages.