UPDATED:
President Bush on Friday said the government’s economic rescue plan is “big enough and bold enough to work,” and defended capitalism as “the greatest system ever devised,” on the final day of another frantic, but more positive, week on Wall Street.
The president’s speech was offset by news from the Commerce Department that new home construction and permits for new projects declined even more than expected in September, to their lowest point since 1991.
Mr. Bush, speaking at the U.S. Chamber of Commerce, outlined the several steps the government has taken to address the “serious financial crisis,” but said it will take time for the plan to have its full effect.
“It took a while for the credit system to freeze up. It’s going to take a while for it to thaw,” Mr. Bush said. “The federal government has responded to this crisis with systematic and aggressive measures.”
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The president devoted great energy to repudiate the idea, expressed by many in the Republican party, that the government is taking steps towards socialism by purchasing equity stakes in banks.
“Some of you view this is as a step toward nationalizing our banks. This is simply not the case,” Mr. Bush said.
He said that the government has taken ownership in financial institutions before, during other “times of great financial challenge.”
“In every case, the government relinquished its ownership stake when the crisis ended, and we will do so again,” Mr. Bush said.
Mr. Bush said the crisis should not be an excuse for the government to raise taxes, or for the nation to become economically isolationist.
He said capitalism is “the greatest system ever devised.”
“It rewards hard work, intelligent risk-taking and the entrepreneurial spirit,” he said.
The president finished his speech 30 minutes before the opening bell rang on Wall Street, marking the last day of yet another hair-raising week for the markets.
The Dow Jones Industrial index opened Friday morning down 200 points but by mid-afternoon was up 200 points, though it closed down 127 points at 8,852.06. This week has held more positive news than last week, when the Dow posted its worst week in history and investors lost about $2.4 trillion.
In contrast, the Dow rose an astonishing 936 points on Monday, only to dip Tuesday by about 77 points and then dive down more than 700 points on Wednesday. Then Thursday, the Dow again rallied 400 points.
White House press secretary Dana Perino said the timing of the president’s speech, before the start of trading, was “a little bit of a calculation.”
But U.S. futures were down Friday morning, on news that housing starts had declined 6 percent to an annual rate of 817,000 units, down from 895,000 in August. Economists had predicted a decline to 880,000.
The White House, however, said there may be a silver lining to the news.
“Over the short-run, this means the housing sector is still weak, and we understand it’s a difficult time for home builders,” said White House deputy press secretary Tony Fratto.
“But it’s important to remember that the problem with housing is we have an over-supply of homes, so over the long run it’s important that we bring supply more into line with demand. That will ultimately help to stop the slide in home values,” he said.
World markets were up, with the exception of Hong Kong’s Hang Seng index, which declined 4.44 percent to its lowest point in almost three years.
Japan’s Nikkei average rose 2.78 percent after posting an 11.4 percent loss on Thursday.
In Europe, Britain’s FTSE index finished up 5.22 percent, Germany’s DAX closed up 3.4 percent, and France’s CAC-40 rose 4.68 percent.
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