Bush: 'US economy will bounce back'

President George W Bush today sought to reassure Americans about the cost and scope of the US financial bail-out plan and said that in the long run “our economy will bounce back”.

Bush, in his weekly radio address, acknowledged that people are concerned about their finances and, while he offered assurances about an eventual recovery, he did not say when that would happen.

Since October 9, 2007, when the Dow topped 14,000, investors have lost $8.3 trillion (€6.1tn) from pension funds, college savings plans, self-funded retirement plans and other investments.

“The federal government has responded to this crisis with systematic and aggressive measures to protect the financial security of the American people,” Mr Bush said.

“These actions will take more time to have their full impact. But they are big enough and bold enough to work.”

Congress gave Bush a $700bn (€519bn) to buy bad assets from banks and other institutions to shore up the financial industry.

Bush was meeting French President Nicolas Sarkozy and European Commission President Jose Manual Barroso for talks on the economy later today at Camp David.

They were stopping off in the US on their way home from a summit in Canada.

White House press secretary Dana Perino said the Camp David meeting was not expected to produce any new policy decisions or the date or place for a planned meeting of leaders of major economic powers, the so-called G8.

Instead, she said it would focus on efforts extending as far back as April on co-ordination for financial stability through measures such as bank disclosures, accounting rules at credit rating agencies, capital standards and asset valuation.

The bail-out plan runs counter to Mr Bush’s oft-stated commitment to free enterprise and the president said he knew many Americans have reservations about the government’s approach, particularly the Treasury’s planned injection of up to $250bn (€185bn) in US banks in return for partial ownership stakes, something that hasn’t been done since the Great Depression of the 1930s.

“As a strong believer in free markets, I would oppose such measures under ordinary circumstances,” the president said.

“But these are no ordinary circumstances. Had the government not acted, the hole in our financial system would have grown larger, families and businesses would have had an even tougher time getting loans and ultimately the government would have been forced to respond with even more drastic and costly measures later on.”

Mr Bush said the government’s involvement was limited in scope and Washington will not exercise control over any private firm and federal officials will not have a seat on bank boards.

He also said he believed that the final cost to taxpayers would be significantly less than the initial investment as the housing market recovers.