Fw: (#゜Д゜)ノ英字新聞

G-7 must take all steps to reverse downturn
The latest statement issued by Group of Seven financial chiefs after their one-day meeting seems to indicate that the G-7 nations have grown more apprehensive about a deepening world credit crunch triggered by the U.S. subprime-related crisis. However, the joint statement shows they were unable to write prescriptions for the crisis.
On Friday, the finance ministers and central bank governors from Japan, Britain, Canada, France, Germany, Italy and the United States met in Washington.
The statement says, "The global economy continues to face a difficult period," adding that the turmoil in global financial markets remains "challenging and more protracted than we had anticipated."
The U.S. housing crisis linked to subprime mortgage-backed securities has deepened, arousing concerns that a feared business slump is becoming a reality in the United States. The G-7 finance ministers and central bank heads may have had no choice but to frankly acknowledge that the global economy is deteriorating.
They expressed concerns about a rapid decline in the value of the U.S. dollar, citing adverse effects caused by the depreciated dollar to the world economy and finances. Their statement also says rising crude oil prices could constitute a factor behind a slowdown in the economy.
===
Public funds should be used
Immediately prior to the G-7 meeting, U.S. Federal Reserve Board Chairman Ben Bernanke described the current economy as being "among the most severe episodes of the postwar era."
The joint statement can be interpreted to imply that the G-7 nations share a sense of caution about troubles that lie ahead.
However, the G-7 statement is unclear about what kinds of specific measures should be taken to overcome the deepening crisis. It says the G-7 members will "continue working closely together." But it stops short of citing specific measures, merely saying that each nation is committed to "taking action...consistent with our respective domestic circumstances."
In Friday's meeting, Finance Minister Fukushiro Nukaga told the United States that Washington needs to keep "all possible options" open, with the aim of solving the subprime loan crisis. Nukaga's remark seems to have been intended to mean that the United States should consider using public funds to defuse the crisis, with the bitter lesson learned from the collapse of Japan's bubble economy in mind.
Nukaga's calls for infusions of taxpayers' money have been echoed by the International Monetary Fund and former Fed Chairman Alan Greenspan.
To help resolve the subprime-related crisis, the United States has continued to considerably relax its monetary policy and supply money to the financial market. However, Washington has remained negative about using public funds to overcome the problem. The latest G-7 statement does not mention the need to infuse taxpayers money as a means of riding out the crisis.
===
Close coordination needed
All this shows how difficult it is for the G-7 nations to coordinate policy to overcome economic and financial woes.
Instead of mentioning infusions of public funds, the latest statement emphasized the need for financial institutions to determine the amount of financial losses they suffered due to the subprime-related crisis as soon as possible, while also hurrying to raise their capital.
Top executives from Japanese, U.S. and European financial institutions convened on the sidelines of the G-7 meeting. They were urged to increase their institutions' capital, and, in the event of a global financial crisis, extend financial assistance.
This may indicate an annoying dilemma faced by the G-7 nations, which feel they must turn to the private sector as they seek to overcome the ongoing crisis.
The G-7 finance ministers and central bankers also said they would draw up a timetable to implement financial stability measures. The move was in line with a final report put together by the Financial Stability Forum, a panel comprising financial supervisory bodies from major nations that advises the group about how best to supervise financial markets, in an attempt to ensure there is no repeat of the current credit crunch.
Admittedly, it is a worthwhile job to strive for stability in the global economy, with a clear deadline set for the target. However, it is not known what can be accomplished from this.
No one is sure whether--and how--the world economy will be stabilized. Can workable measures be immediately carried out to end what is called the greatest postwar financial crisis? The G-7 statement is a start for a daunting task assigned to the group in achieving the target.