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Leaders unite over financial crisis, but is it enough?

October 13, 2008

Italy’s Prime Minister Silvio Berlusconi (C) gestures as he arrives with Greece’s Prime Minister Costas Karamanlis (2nd L) to attend a meeting at the Elysee Palace in Paris October 12, 2008. France’s President Nicolas Sarkozy and leaders of euro zone countries hold an emergency meeting in Paris to agree on specific, pan-European measures to prop up the battered financial sector and halt market panic. REUTERS/Eric Feferberg/PoolEuropean leaders have finally got their act together. After weeks of looking divided over how to tackle the global financial crisis, they agreed on joint measures at  emergency talks in Paris. 

Their meeting followed talks in Washington at the weekend involving G7 finance ministers and officials from the International Monetary Fund and the World Bank at which governments pledged to support the financial system. U.S. President George W. Bush said he was confident the world’s major economies could overcome the challenges.

But is it enough to stave off the crisis? 

Some equity investors appeared to be comforted. The pan-European FTSEurofirst rose on Monday, U.S. stock futures went up and Asian shares outside Japan, which was closed for a holiday, made gains. 

Just a few days ago, the IMF warned of the danger of financial meltdown but its chief, Dominique Strauss-Kahn said on Monday the worst of the crisis was possibly over. 

Many newspapers were cautious. The Toronto Globe and Mail saw hope in the fact that the world’s financial  leaders have started setting aside their differences but said some market participants could be disappointed by the lack of specifics. Floyd Norris wrote in The New York Times that there was no assurance that credit would flow when markets reopen this week.
A stock broker makes a phone call at the close of the Indonesia Stock Exchange in Jakarta October 10, 2008. Indonesia dropped plans to reopen its stock market on Friday morning after a two-day suspension and despite policy makers unveiling new measures aimed at calming fears that Southeast Asia’s top economy faces a new crisis. REUTERS/SUPRI

The Economist said the “dithering” was over but  some problems remained.

Commentators and politicians are united in saying that staying together holds the key to success and that the consequences could be dire if unity does not hold. 

Commentator Will Hutton, writing in The Observer, said: ”I don’t know whether politicians and their advisers can move as quickly as they need in so many areas and collaborate across so many countries to restore stability.”

He added:  ”Without collaboration and leadership, we face disaster.”

Comments

The situation with Iceland’s currency still isn’t resolved, as they can’t pay for imports like food and medicine. How many other countries are going to have to be rescued by the IMF?

Posted by Chris Baker (US) | Report as abusive
 

Does collaberation means staying in the game like ‘ poker’ and going bust while the rest says i’ll lend you more money ? I think this ‘financial tsunami’ are speculators holding the Banks and countries by their throats. We have lost Iceland, Ukraine & Hungary. Just like the Asian financial crisis does 10 years ago. Somebody is benefiting from all of this. This is exaxtly what they want us to do – to lend you more money in exchange what ? The time is ripe to do the opposite and to close all your doors and fold. Peg your currencies, this lesson was well learned 10 years ago.

 

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