Bush: World will act to fight market mayhem
Falling markets abroad and in US drive may drive nations to coordinate additional rescue steps.
Washington – Washington was the temporary headquarters Friday of an ad hoc world effort to produce a coordinated response to the fear that has driven down stock markets and frozen bank lending around the globe.
Financial officials from the G-7 group of industrialized countries were set to confer with President Bush in the White House, in advance of the weekend's scheduled International Monetary Fund meetings.
With a televised statement from the Rose Garden, Mr. Bush sought to reassure investors that governments are instituting strong measures to combat the financial crisis.
"The world is sending an unmistakable signal that we are in this together, and we will come through it together," said Bush.
The crisis has grown so quickly – and affected so many nations so deeply – that so far such statements from an array of world leaders have gone for naught. Volatility and selloffs continued to blast through bourses from Tokyo to New York. The week seemed set to go down in history as one of the most stomach-churning periods in the history of modern capitalism.
Asian markets fell heavily on Friday. Japan's was the most affected, with the Nikkei falling 9.6 percent. Overall, the Nikkei is down by almost 25 percent since Monday.
Britain's FTSE 100 dropped 8.5 percent Friday. The German DAX 30 went down 7 percent. France's CAC-40 lost 6.8 percent of value.
Volatility on the New York Stock Exchange was record-setting. The Dow Jones Industrial Average plunged 700 points, or about 8 percent, in the first 10 minutes of trading. It then trampolined up into positive territory, dropped again, and recovered somewhat.
Only days ago, the newly passed $700 billion US financial bailout bill looked like a huge response to credit problems. Now it seems just a start, as the Bush administration plans further moves to jump-start bank lending. Treasury officials on Thursday confirmed that they are considering using some of their bailout funds to inject cash directly into troubled banks.
Furthermore, US officials reportedly are weighing whether to guarantee certain kinds of debt, as a means of lowering lenders' fears that cash they send out might not come back. Britain, for instance, recently guaranteed all bank debt maturing up to 36 months.
The US might also decide to temporarily insure all US bank deposits. The current cap on Federal Deposit Insurance Corp. guarantees is $250,000 per deposit account.
Bush made no official announcement of new moves in his Rose Garden appearance Friday. He did say the administration's rescue approach "is flexible enough to adapt as the situation changes."
Bush also called for patience in the face of the fact that it will take time for rescue plans to work.
"We are a prosperous nation with immense resources and a wide range of tools at our disposal. We're using those tools aggressively," said Bush.
Meanwhile, House Speaker Nancy Pelosi (D) said she may push for a postelection special session of Congress to produce a new $150 billion stimulus package to help an economy that most economists see as heading toward or already in recession.
Another dose of government spending could create jobs by investing in public works and could help ease any slowdown in the economy caused by the credit crisis, Speaker Pelosi told reporters.
"We may have to go back into sesson before the next Congress," she said.
Associated Press material was used in this report.