Sun, Oct 12, 2008 page1

• G7 offers five-point plan to stem crisis

  CONFIDENCE BUILDING The countries committed to getting credit flowing more freely and to support banks’ efforts to raise money from public and private sources

  • AP
  • • 
    • 
    • 

  Finance officials from the world’s top economic powers endorsed a plan on Friday to stem the worst financial crisis in more than a half-century.

  The officials from the G7 countries issued the five-point plan aimed at reversing a credit crisis that has unhinged Wall Street and markets around the globe. They pledged to take “decisive action and use all available tools.”

  Under the plan, the countries vowed to protect major banks and to prevent their failure. They also committed to working to get credit flowing more freely again, support the efforts of banks to raise money from both public and private sources, safeguard bank depositors and revive the battered mortgage financing market.

  “The current situation calls for urgent and exceptional action,” the G7 finance ministers said in a joint statement.

  To that end, US Treasury Secretary Henry Paulson said the US government would move ahead with a plan to buy stock in financial institutions. The administration of US President George W. Bush received authority to make direct purchases of stock in banks in the US$700 billion financial rescue bill Congress passed last week.

  Paulson and Federal Reserve Chairman Ben Bernanke met with their counterparts from the world’s six other richest countries as the rout of financial markets sped ahead in the face of dramatic rescue efforts in the US and abroad.

  The G7 countries are the US, Japan, Germany, Britain, France, Italy and Canada.

  “There was an overwhelming consensus that a coordinated approach is necessary,” German Finance Minister Peer Steinbrueck said after the meeting.

  Japanese Finance Minister Shoichi Nakagawa echoed that sentiment. Although the US is the source of the financial “earthquake” roiling world markets, countries need to work together and not assign blame, he said.

  Earlier in the day, Nakagawa said that Japan was set to propose that a joint fund be set up to give emergency loans to struggling nations. He did not, however, provide details after the G7 meeting.

  Aside from the important details on bank stock purchases that Paulson offered, the finance officials did not provide specifics beyond their five-point action plan. The one-page joint statement from the G7 financial officials was rare in its brevity. The statements usually issued by the G7 run multiple pages.

  Bush held a meeting with the G7 financial officials and said afterwards they were cooperating on a global response to the credit crisis that would lead toward a “path of stability and long-term growth.”

  Bush announced no new strategies to attack the economic woes circling the globe.

  “The United States has a special role to play in leading the response to this crisis,” Bush said. “That is why I convened this morning’s meeting here at the White House and it is why our government will continue using all the tools at our disposal to resolve this crisis.”

  Whether Wall Street will be buoyed by the G7 pledges is another matter.

  “I think the markets will wait and see whether all of these policy steps will make a difference,” said Mark Zandi, chief economist at Moody’s Economy.com. “I think investors are panicked. They are not going to stop selling until they are convinced that these steps will work.”

  Also See: Dollar and yen gain as investors seek refuge、 US to invest directly in banks
• Most Popular

  • 1

    Taiwan and the US preparing a ‘hellscape’ strategy

  • 2

    Two questioned over DPP legislator recall forgery

  • 3

    Former DPP aide detained in spy probe

  • 4

    Taobao fined NT$1.2m for unauthorized advertising

  • 5

    Nazi armband protest in recall petition case draws criticism