Bush pledges Global Response to Credit Crisis

 

Treasury Secretary Henry Paulson, left, listens as President Bush speaks with the G7 Finance Ministers in the Rose Garden of the White House, Saturday, Oct. 11, 2008, in Washington. (AP Photo/Evan Vucci) (Evan Vucci - AP)

President Bush this morning called on world governments to continue working together in a bid to stabilize collapsing financial markets.

"All of us recognize that this is a serious global crisis, and therefore deserves a serious global response," Bush said at the White House after meeting with finance ministers from the world's seven biggest industrialized countries who are in Washington to hammer out a joint set of principles aimed at containing the financial crisis and restoring badly damaged confidence.

Bush also warned countries not to work against each other, saying that a "common purpose" is necessary to solve the worsening crisis. He praised the Group of Seven for a communique issued late Friday that promised concerted action.

"We're in this together; we will come through this together," Bush said.

The president has made almost daily attempts over the past three weeks -- including an appearance in the Rose Garden yesterday -- to calm markets or reassure Americans about the economy. But anxiety is still high. Yesterday, the Dow Jones industrial average fell 128 points, or 1.49 percent, to 8451, but during the day it had lurched from 7883 to 8901 -- a roller-coaster ride of more than 1,000 points and an indicator of the uncertainty gripping investors as they try to figure out the severity of the economic downturn and whether various companies will survive.

Over the past five days, the Dow Jones industrial average has registered the biggest weekly percentage decline in its 112-year history, surpassing the record decline set during the Depression, in the week ending July 22, 1933.Overseas markets have also been hit hard.

Bush listed a series of steps taken by the United States and other major economies, such as his administration's $700 billion rescue plan and a coordinated move this week to cut interest rates.
The benefits will not be realized overnight," Bush said. "But as these actions take effect, they will help restore stability to our markets and confidence to our financial institutions."

TheG-7 finance ministers' communique last night vows to "take all necessary steps to unfreeze credit and money markets" and to "use all available tools" to prop up and prevent the failure of institutions critical to the financial system.

U.S. Treasury Secretary Henry M. Paulson Jr. also yesterday confirmed earlier reports that the United States is drawing up plans to buy equity stakes in financial firms. He said federal money would be offered on a "standardized" basis to all banks in a way that would attract new private capital, as well.

The finance ministers' communique was designed to assure investors that world leaders would work in concert rather than at cross-purposes in forging measures to aid besieged financial institutions. It laid out common guidelines that endorsed the injection of capital into the banking system, the purchase of troubled assets from banks and broader guarantees of deposits. Europeans were also pressing for guarantees of interbank lending, though the Bush administration was reluctant to embrace the measure.

"The moral hazards have to be dealt with at a later stage. That's my sense," Christine Lagarde, France's minister of economy, industry and employment, said before the meeting of the Group of Seven, setting aside concerns about governments assuming private-sector risks. Lagarde added that the "functioning of the basic principles of our markets" has to be restored. "That is the main and first and top priority," she said.