US President George W. Bush said Saturday after crisis talks with top US allies that the world's richest economies agreed the international financial meltdown requires "a serious global response." "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 promised.
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 the 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, hailing from Britain, Canada, France, Germany, Italy, 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.
"There have been moments of crisis in the past when powerful nations turned their energies against each other, or sought to wall themselves off from the world," he said. "This time is different: the leaders gathered in Washington this weekend are all working towards the same goals."
But Bush hailed international co-operation thus far, and said the Group of Seven would work with an enlarged forum known as the Group of 20 that includes other major economies like China, India and Russia.
"We must ensure the actions of one country do not contradict or undermine the actions of another. In an interconnected world, no nation will gain by driving down the fortunes of another," he warned. Bush, who has described the US housing collapse as the epicenter of the global financial earthquake, said he had convened the meeting because Washington "has a special role to play" to defuse the crisis.
"Our government will continue using all the tools at our disposal," said Bush, who left the White House shortly after the talks, bound for a bicycle ride on a crisp, sunny autumn day. In the talks, US Secretary of State Condoleezza Rice and Treasury Secretary Henry Paulson sat on either side of the US president, who was surrounded by other top aides including national security adviser Stephen Hadley.
The meeting at the White House came after the G7 finance chiefs agreed Friday to use "all available tools" to support major banks and prevent their failure as they sought to dampen a financial firestorm threatening more mayhem. The plan followed another day of massive falls on the markets as investors rushed to the exits, putting G7 officials under intense pressure to come up with a convincing accord.
Analysts said, however, there was a lack of substance and nothing that would calm the markets and so allow a more measured approach to the problems thrown up rather than the crisis mode of the past few weeks.
The G7 major advanced economies agreed to "take decisive action and use all available tools to support systemically important financial institutions and prevent their failure." The meeting came ahead of weekend gatherings of the Group of 20, IMF and World Bank.
The G7 said they would take "all necessary steps to unfreeze credit and money markets and ensure that banks and other financial institutions have broad access to liquidity and funding." The credit markets are crucial because they are used to provide the short-term funding essential for banks and companies to manage their affairs.
Since the collapse of the US subprime or higher-risk home loan market last year, the banks have been saddled with mountains of bad debt, undercutting their finances and making them unwilling to provide any but the safest loan. As lending has dried up, business has been increasingly affected, in turn hitting employment and consumer spending to leave the US economy prey to a vicious circle of declining demand and activity.
In this respect, the G7 said they would "ensure that our banks and other major financial intermediaries, as needed, can raise capital from public as well as private sources, in sufficient amounts to re-establish confidence and permit them to continue lending to households and businesses." Global stock markets went into a freefall Friday - some plunging 10 percent in the worst showing since the 1987 crash - even though Wall Street stemmed the losses in a session of ups and downs.
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