IMF Warns of Global ‘Meltdown’
The International Monetary Fund warned of a global economic meltdown on Saturday. Dominique Strauss-Kahn, the fund’s head, said in Washington, D.C. that the world’s financial system is on the “brink of systematic meltdown.”
He said the crisis was caused, for a big part, by fears over debt-ridden banks but added that rich countries had not done enough to restore confidence.
”Intensifying solvency concerns about a number of the largest US-based and European financial institutions have pushed the global financial system to the brink of systemic meltdown,” Strauss-Kahn said.
The IMF’s chair was joined by leaders of the seven largest industrial nations, who had agreed to an emergency meeting in response to the worldwide economic crisis. U.S. President George W. Bush said that “[w]e must ensure the actions of one country do not contradict or undermine the actions of another.
“In an interconnected world, no nation will gain by driving down the fortunes of another. We are in this together. We will come through it together.”
Bush and Krauss’ words came at a time when increasingly more analysts and commentators call on governments worldwide to do more to prevent markets everywhere from collapsing. Especially the European Union was criticized in the past week for not coordinating member nations’ effort enough. The United States, meanwhile, passed a bailout bill, but most experts believe this will not be enough to counter the crisis and restore confidence.
The main problem, however, remains that too many people lived above their means, especially in the United States. They literally lived on borrowed money. The true cause for the crisis is cultural.
And that is something the government cannot do anything about. Not much, at least.
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The plan sets out to take decisive action using all available tools to support struggling financial institutions to prevent their failure;
take all necessary steps to unfreeze credit and money markets;
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