Japan warns of longer slump

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Tokyo, November 18:: Japan's recession could last even longer than feared, the country's economy minister warned on Tuesday, echoing comments from US officials that the pain from the global financial crisis was far from over.

A day after a report showed Japan had toppled into recession, Economy Minister Kaoru Yosano said the next fiscal year starting in April could also see negative growth for the world's second-biggest economy.

"I can hardly be confident that it would be positive," he told a news conference following a cabinet meeting.

Australia's biggest investment bank, Macquarie Group, said it was heading for its first fall in annual profit in 17 years -- the latest gloomy news from the financial sector following Citigroup's announcement it was cutting 52,000 jobs, the second-largest corporate lay-off plan in history.

In Washington, lawmakers argued over a proposal by Senate Democrats for a $25 billion bailout loan for the auto industry to stave off an even wider economic collapse.

"The reason people think failure could be cataclysmic is that there are so many companies that are tied to the auto industry," said Marc Pado, US market strategist at Cantor Fitzgerald & Co.

Automakers have been hit by a collapse in consumer spending, triggered by a housing crash and worsened by rising unemployment. US officials say even with major stimulus measures in place, it will take considerable time for the US economy to recover.

"There's going to be stress in the capital markets for a number of months here because housing prices are still declining and I think it's moved beyond housing," Treasury Secretary Henry Paulson said at a conference.

"We've got a lot of work to do to restore the financial system, and I think restoring the financial system will go a long way toward helping the economy to recover."

Kansas City Federal Reserve President Thomas Hoenig said there was little more the US central bank could do to help.

"The Fed has done about as much as it can do," he said in a TV interview. "I don't know of any painless way to rebalance your economy, you have to go through this adjustment, and we will get through it, but it's not going to be without consequence.

HEADING FOR RECESSION

The Philadelphia Federal Reserve's latest Survey of Professional Forecasters, released on Monday, said the US economy entered a recession in April and would not emerge for 14 months, which would be the longest contraction since 1982.