World powers pledge to combat credit crisis

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(Agencies)
Updated: 2008-10-11 20:45

WASHINGTON - Financial officials from the world's wealthiest industrial countries are pledging decisive action to deal with the biggest upheavals to hit the global financial system since the Great Depression.

US President George W. Bush makes a statement in the Rose Garden after meeting with G7 finance ministers and heads of international finance institutions at the White House in Washington, October 11, 2008. Also pictured are US Treasury Secretary Henry Paulson (L) and France's Finance Minister Christine LaGarde (R). [Agencies]

The big question is whether their one-page action plan will be enough to stop the bleeding as investors watch trillions of dollars of wealth melt away.

In an effort to expand the firepower the United States is bringing to the problem, Treasury Secretary Henry Paulson announced late Friday that it had decided to go forward with a plan to buy a part ownership in a broad array of American banks. It would be the first time the US government has employed such a program since the 1930s.

President Bush invited Paulson and Federal Reserve Chairman Ben Bernanke and their counterparts from the other G-7 countries to come to the White House Saturday morning for a meeting that the administration hoped would demonstrate global resolve in attacking the current crisis.

Bush, speaking on the economic chaos for the 21st time out of the past 26 days, said Friday that the government's rescue program was aggressive enough and big enough to work. "We can solve this crisis and we will," he pledged.

The G-7 officials wrapped up three hours of closed-door talks Friday with one of the shortest joint communiques in the history of the group. It was also the most direct in its promise to take "all necessary steps to unfreeze credit and money markets" to end a severe credit crisis that began in the US a year ago but since has spread worldwide and has grown in furiosity.

Fears that banking systems had essentially frozen up have sent worried investors rushing for the exits. The Dow Jones industrial average just completed its worst week in history and has plunged by nearly 2,400 points over the past eight trading sessions. Over the last year, investors have suffered $8.4 trillion in paper losses.

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