Washington - Global stock markets have passed judgement on US President George W Bush's 145-billion-dollar economic stimulus package, and the verdict couldn't be clearer. Far from soothed by his proposal, which raises the prospect of tax relief totalling about 1 per cent of the US gross domestic product, investors worldwide have continued to flee stocks.
After Bush announced the details Friday, the New York Stock Exchange continued its relentless slide and all three major Wall Street stock indices closed lower. The broad-based Standard & Poor's 500 Index ended the week 5.4 per cent lower.
US financial markets were closed for Monday's Martin Luther King Jr holiday. But Asian and European stock exchanges suffered steep losses, widely attributed to a lack of confidence that Bush's stimulus plan can keep the world's largest economy out of recession.
The bleeding worsened Tuesday, as Asian markets opened with even sharper declines, while Wall Street braced for a shock after its three-day weekend.
The January panic is the culmination of months of uncertainty arising from the deflating US housing market and rising subprime mortgage defaults, which have disrupted the banking industry and credit markets in a widening contagion of fear.
Lingering high energy costs and a December spike in the US unemployment rate have further unnerved financial markets.
While global investors voted with their wallets, critics in the United States were vocal in their verdicts against the Bush proposal.
The Wall Street Journal, usually supportive of the conservative Bush, wrote that tax reimbursements have been tried in the past and failed to stimulate the economy.
Washington Post columnist Robert Samuelson said the Bush plan was intended only to distract US consumers from their pain, like giving sweets to a crying child.
"It's an election year. Voters feel anxious about a weakening economy," Samuelson wrote. "Send them economic lollipops - say, a 500-dollar tax rebate for most families. Make them feel better. Show them you are concerned. Prove that you are trying to improve the economy."
Even amid the subprime mortgage crisis, experts are asking themselves what has actually happened to push the US economy to the brink of recession. Samuelson pointed out a "touch of hysteria" that is as yet unjustified by the actual state of the economy.
A day before Bush's much-awaited announcement of his economic stimulus package, US Federal Reserve Chairman Ben Bernanke hinted strongly that the rate-setting central bank would continue loosening monetary policy when it meets next week.
Uncharacteristically for Wall Street, which is usually mollified by the prospect of lower interest rates, the pronouncement failed to slow the exodus from stocks.
"We are in panic territory," Patrick Chang, a money manager in Kuala Lumpur, told the Bloomberg financial news agency as Tuesday's selloff continued. "The markets are pricing in a recession."
