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Global Stocks Soar as Countries Plan Rescues
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He said the country's banks would have to pay commissions to the government on whatever they receive.
As markets fell last week, there was criticism that European governments were not coordinating their efforts and the ad hoc approach was failing. "The time of each one for itself is fortunately over," Sarkozy said Monday.
In Germany, Europe's biggest economy, the government announced a $680 billion rescue package. The bulk of the money will be used to guarantee loans to private banks in a special fund that will expire at the end of 2009.
In addition, the German government will spend about $110 billion to make direct capital investments in private banks, a move the government had steadfastly refused to take until now.
Officials said they were forced to reconsider after Britain announced a similar package and other European governments indicated they would follow suit. "We are taking drastic action, no question about it," German Chancellor Angela Merkel said.
Lawmakers said they don't have a clear idea of how much the plan will cost taxpayers in the end. They are hoping that they will be able to resell their investment stakes at a profit if share prices rebound and that the loan guarantees will not be invoked.
"Germany's economy has not faced a challenge on this scale since the reunification of East and West Germany in 1990," Steffen Kampeter, a legislator with Merkel's Christian Democratic party, told reporters.
German officials said they would probably impose a tight salary cap for executives at banks that turn to the government for help. "Managers should not receive more than 500,000 euros per year," or about $680,000, said Finance Minister Peer Steinbrueck. "And no bonuses. And no severance deals. And no dividends."
Karen Croxson, an economist at Oxford University in Britain, predicted that in the days ahead, there will be major efforts to change the way bank executives are paid. She said a key factor contributing to the global economic crisis was that bank executives' pay and actions were linked to "short-term success," not long-term stability.
[Japan's stock markets were closed Monday for a holiday. In early tradng Tuesday, exuberant buying replaced last week's panic selling. After its worst week on record, the benchmark Nikkei average surged to its biggest gain in 18 years, soaring as much as 13 percent by midday.
Banks and car companies, many of which had lost more than a quarter of their value last week, rebounded strongly. Toyota was up more than 14 percent. The Bank of Japan pledged Tuesday to provide as much liquidity to banks as needed to stabilize markets.]
In Latin America, the strong optimism found in so many other markets prevailed Monday. Brazil's market rose 15 percent, and Mexico's was up 11 percent. As in Europe, governments helped with special measures to ease the financial crunch.
Saudi Arabia's main index rose 9 percent, and Dubai's was up 11 percent Monday.
Correspondents Blaine Harden in Tokyo, Rama Lakshmi in New Delhi and Edward Cody in Paris contributed to this report. Whitlock reported from Berlin.
