G7 nations pledge to combat crisis

The G7 issued a 5 point plan for “decisive action” to unfreeze the credit markets, after a meeting in Washington. Widespread fears of a global recession caused Asian, European and U.S. markets fell on Friday, despite rate cuts and injections of cash by central banks. U.S. also said that direct investment in banks for the first time since the 1930s, after passing a United Kingdom.

Just as the Washington meeting of the G7 – comprising the U.S., Japan, Britain, Germany, France, Italy and Canada – the International Monetary Fund (IMF) will hold talks in U.S. capital over the weekend.

The leaders of the countries in the euro zone will also meet in Paris on Sunday.

To protect savers

After Friday’s G7 meeting, U.S. Treasury Secretary Henry Paulson said the group had a clear vision of what needed to be done, and is working together to stabilize the panic-stricken by the world’s money markets.
“We are fully focused on the immediate need to stabilize our financial market and recognize that investor confidence is crucial to restore liquidity and improve the stability of our financial system,” he said.

The five-point plan is intended to protect the major banks and financial institutions from failure and ensure that they can raise capital from public and private sources.

It includes measures to unfreeze the flow of credit and protect savers, but did not disclose specific measures.

He pledged to take “decisive steps and use all available tools” to support financial institutions.

He also pledged to take all necessary steps to unfreeze credit and money markets, banks can ensure the collection of capital from public and private sources, and ensure national deposit insurance and warranty programs are robust.

Paulson says U.S. is working closely with China and Japan – where they have large amounts of U.S. Treasury bonds – To resolve the crisis. He added that the U.S. government to buy bank equity.

“We’re going to do it as soon as we can do it and do it effectively,” said Mr. Paulson.

On Wednesday, the United Kingdom announced that it would set aside £ 50 billion to buy shares in banks in the country. While the G7 statement identifies the main areas requiring urgent attention, is short on details, the BBC said Andrew Walker, in Washington, adding that he now greatly depend on how each government has its own plans for the future.

Panic markets

Earlier Friday, U.S. President George W Bush said his government would continue to act to resolve the crisis. Speaking at the White House lawn, Mr Bush said that the recent turmoil in the market is being driven by “the uncertainty and fear.” However, he said the U.S. authorities had an overall strategy and a wide range of tools that were using “aggressive” to solve the problems. Mr Bush defended last week’s rescue package, saying it was large enough, but stressing that take time to have its full effect.

However, market conditions volatile, despite continued moves on Wednesday by six of the major central banks to cut interest rates by 0.5% and pass through China’s central bank cut rates from 0.27 %.

Wall Street has lost a fifth of its value in the last 10 trading days, suffering one of its biggest weekly drop since the Dow Jones was created 112 years ago.

Markets in France, Germany and Britain to halt plunged Friday between seven and nine per cent lower.

Shares in Asia also closed sharply, with Japan the main Nikkei index suffering the biggest one-day drop since the 1987 stock market crash.

As mounting panic, there were suspensions in the trade of several countries including Russia, Germany, Austria, Iceland, Romania, Ukraine, Brazil and Indonesia.

In the midst of darkness, the British pound fell to a five-year low against U.S. dollar and oil prices plummeted to a year low.


One Response to “G7 nations pledge to combat crisis”

  1. Tim Ramsey Says:

    I recently came accross your blog and have been reading along. I thought I would leave my first comment. I dont know what to say except that I have enjoyed reading. Nice blog.

    Tim Ramsey

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