Monday, February 11, 2008

G7: No Quick Fix

The world's leading economies pledged on Saturday to work together to secure stability in volatile markets but brushed off the idea of a single uniform remedy for the Group of Seven industrialized nations.
A joint statement, issued at the end of an afternoon meeting in Tokyo of the G-7 finance chiefs and central bank governors, acknowledged that "downside risks" remain for the global economy. It also warned of the dangers of the U.S. housing crisis, while assuring that U.S. growth was expected to continue in 2008.

The officials from the United States, Japan, Germany, France, Canada, Britain and Italy also urged oil-producing nations to boost output and encouraged China to accelerate the appreciation of its currency.

"Going forward, we will continue to watch developments closely and will continue to take appropriate actions, individually and collectively, in order to secure stability and growth in our economies," the statement said.

The G-7 had faced calls for increased coordinated action to deal with the U.S. housing problems in subprime mortgage loans, financial market turmoil, high oil and commodity prices, and heightened inflation expectations.

The various countries, however, have differed on what measures were appropriate. The U.S. has urged other countries to pursue policies to boost domestic demand, while the Europeans said their economies were resilient and focused more on regulatory coordination.

Japanese Finance Minister Fukushiro Nukaga, who hosted the gathering at a Tokyo hall, said the economic conditions in each nation were so different that a single remedy was not feasible.
The pain will continue for some time with the world's poor being disproportionately affected. It never ceases to amaze me that those that cause economic distress are usually those least effected. The subprime crisis which has sent world markets into a tailspin, has made millionaires of many who helped create the crisis. It seems crime really does pay, at least here in the good old USA.

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