Sunday, October 12, 2008

US Financial Crisis Can Cause the Fallout in Developing Countries

Many ways have been taken to tackle the unfolding economic crisis; the condition has made world finance ministers to worry the fallout in developing countries and poor nations.

President Bush and global financial leaders sought to show unity Saturday as a way to calm investors whose panic has spread despite stepped up government action. The crisis has dominated discussions at the meeting of the Group of Seven industrialized nations and the annual sessions of the World Bank and International Monetary Fund. Many participants spoke in unusually somber tones of the need for action.

The discussions shifted Sunday to the World Bank and its policy-setting committee, led by Mexican Finance Minister Agustin Carstens and the bank's president, Robert Zoellick, a former U.S. diplomat and trade negotiator.

According to Bush, his administration was doing every possibility to halt the biggest market disruption since the Great Depression. Accompanied by Federal Reserve Chairman Ben Bernanke and Treasury Secretary Henry Paulson, he participated for about 25 minutes in a discussion late Saturday with the Group of 20 nations, which includes wealthy countries as well as major developing countries such as China, India and Brazil.

In a joint statement, the G-20 finance officials promised to work together "to overcome the financial turmoil, and to deepen cooperation to improve the regulation, supervision and the overall functioning of the world's financial markets."

Other speakers at a policy meeting of the IMF echoed Bush in stressing the important of countries to work together to solve the crisis, avoiding the go-it-alone projectionist trade strategies that worsened conditions during the Great Depression of the 1930s.

Meanwhile, European leaders were meeting Sunday in Paris in search of a common response to the financial crisis. The result could be a hard exercise for the 15 heads of state or government of the euro-zone, where the euro currency is used, because of the varied financial landscapes in each country.

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