Powers Vow to Limit Credit Crisis Damage
Saturday, October 20, 2007; 12:52 AM
WASHINGTON -- Finance officials from the world's top economic powers pledged Friday to do all they can to limit damage to the global economy from a jarring credit crisis as Wall Street took another plunge.
"We remained committed to doing our part in sustaining strong global growth," the finance officials said in a joint statement. While saying the functioning of global financial markets was improving somewhat, they warned that "uneven conditions are likely to persist for some time and will require close monitoring."
The turmoil that financial markets have suffered through in recent months dominated the Group of Seven discussions, which were hosted by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke. Besides, the United States, the other members of the G-7 are Japan, Germany, France, Britain, Italy and Canada.
The finance officials didn't spell out a specific course of action. Rather, they sought to strike a confident tone that they are on top of the situation. Finance officials also said they will seek to learn the causes and lessons from the turmoil.
"Our response to recent financial turbulence must be based on full analysis of its causes," the officials said in their statement.
Several stores in the upscale Georgetown district boarded up their windows Friday night in anticipation of possible vandalism by protesters in town for the World Bank and IMF meetings. Some protesters marched through Georgetown to voice opposition to "excessive wealth and privilege," though the protests were about 10 blocks east of the meetings.
Police said there were no arrests, but there was at least one incidence of violence as protesters clogged the streets. One woman was bleeding from the face, apparently hit by a brick. Police did not know how seriously she was injured.
Risks to the global economy have intensified since finance officials from the G-7 countries last gathered here in April.
The housing slump in the United States has deepened. Problem mortgages have multiplied. Credit has dried up for risky and some not-so-risky borrowers. The spreading troubles unhinged Wall Street in the late summer and sent stocks worldwide into a tailspin.
It appeared things had calmed down since, but Wall Street got unnerved again on Friday. The Dow Jones industrials plunged 366.94 points. Ominously, the tumble came on the 20-year anniversary of the Black Monday stock crash. This time it was lackluster corporate earnings, credit concerns and rising oil prices that rattled investors.
Given the economy's delicate state, there are worries that more bad news could easily push edgy investors into another bout of panic and spook both businesses and individuals, whose spending and investment are critical to the world's economic health.
Surging oil prices also are complicating the global outlook. They briefly topped $90 a barrel, a new trading high, then eased a bit and closed at $88.60 a barrel Friday in the United States.