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A serious global crisis requires a serious global response for good of all, says President Bush.
Washington: US President George W Bush said on Saturday the world's richest economies were united on a "serious global response" to the fin-ancial meltdown, as the eurozone countries prepared for a crisis summit.
"We will stand together in addressing this threat to our prosperity. We will do what it takes to resolve this crisis. And the world's economy will emerge stronger as a result," he said.
Bush unveiled no new proposals after meeting with finance ministers from the Group of Seven (G7) countries and the heads of the International Monetary Fund (IMF) and World Bank for about 40 minutes, but promised a united front.
"All of us recognise that this is a serious global crisis and therefore requires a serious global response for the good of our people," the US president said. "We're in this together, we'll come through it together."
The finance ministers of Britain, Canada, France, Germany, Italy and Japan stood in silence somberly behind Bush, who spoke in the White House Rose Garden in front of fluttering flags from the seven countries.
Bush warned against any "beggar-thy-neighbour" policies like those blamed for deepening the Great Depression of the 1930s, including steps that choke off global trade.
Bush also said the G7 would work with an enlarged forum known as the Group of 20 that includes other major economies like China, India and Russia, which was also set to hold crisis talks in Washington on Saturday.
Bush's comments were aimed at avoiding the mistakes that worsened economic conditions during the Great Depression in the 1930s. Then, some nations pursued go-it-alone strategies such as erecting protectionist trade barriers to shield their domestic industries. Those trade barriers ended up only worsening the global downturn.
In the current crisis, Ireland moved to guarantee all bank deposits, a decision that triggered similar actions in Germany and other nations which were concerned that nervous depositors would move their bank accounts to Ireland.
The White House meeting lasted about a half-hour, less than scheduled.
Officials from the Group of 20 countries - which include the wealthiest and the world's biggest developing nations such as China, Brazil and India - planned to attend a meeting on Saturday evening that Paulson requested to explain the actions that US and other wealthy nations have taken.
For Bush, it was the 22nd time in 27 days that he has spoken publicly about the financial crisis. Congress heard testimony last week that the retirement accounts of Americans have lost $2 trillion in the past 15 months, and the New York Stock Exchange Dow Jones industrials average plummeted more than 18 per cent last week alone, the largest ever in a week.
A wave of selling sent markets lower in several Asian and European nations on Friday, while other exchanges were closed to prevent the same fate.
In Europe, French President Nicolas Sarkozy and German Chancellor Angela Merkel met on Saturday in France, the day before a Paris summit of the leaders of the 15 eurozone econ-omies as well as British Prime Minister Gordon Brown.
After the G7 talks on Friday, Paulson announced that the US government was ready to invest directly in banks for the first time since the 1930s depression in a bid to restore confidence.
5-point action: Listed remedies
- Take decisive action and use all available tools to support systemically important financial institutions and prevent their failure.
- Take all necessary steps to unfreeze credit and money markets and ensure that banks and financial institutions have access to liquidity and funding.
- Ensure that our banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources to re-establish confidence and permit them to continue lending to households and businesses.
- Ensure that our respective national deposit insurance and guarantee programmes are robust and consistent so that our retail depositors will continue to have confidence in the safety of their deposits.
- Take action, where appropriate, to restart the secondary markets for mortgages and other securitized assets. Accurate valuation and transparent disclosure of assets and implementation of quality accounting standards are necessary.
Do you think the latest G7 rescue plan will help the market bounce back? Or is it inadequate? What more could be done to reign in the losses?
Your comments
The G7 rescue plan may help the market bounce back but it is temporary. The US and other rich countries should liberalise their policies and allow a bigger work force to increase the productivity. Only the globalisation of trade won't help without globalisation of the work force.
C.P.R.
Dubai,UAE
Posted: October 12, 2008, 13:19
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