Bush wants unity with Europe on financial crisis

US President George W Bush, in a meeting with Slovakian President Ivan Gasparovic, called for a “common policy” between the United States and Europe to address the financial crisis that has threatened the world’s economy. Bush said he and Gasparovic talked about “our common desire to work with our European friends to develop a best as possible common policy.”
Bush earlier had spoken with French President Nicolas Sarkozy, British Prime Minister Gordon Brown, German Chancellor Angela Merkel and Italian Prime Minister Silvio Berlusconi to coordinate efforts to prevent more economic damage to a world that went into panic mode on October 10, with markets spinning down in an out-of-control free fall as investors failed to believe government intervention plans to bail out banks and financial institutions would work.
Bush’s comments came ahead of a meeting of the finance ministers and central bank heads of the world’s seven wealthiest democracies in Washington at the US Treasury and a separate meeting October 11 with the G7 ministers and heads of the International Monetary Fund and World Bank.
Dominique Strauss-Kahn, the IMF managing director, warned that the world was on the “cusp” of a recession and said the only way to ease the slowdown would be through international cooperation. “It’s fair to say that all of us have underestimated the strength of the financial crisis,” he said.
An emergency summit of world leaders from the Group of Eight (G8) - which includes Russia - is also being considered, as markets have continued to plummet despite a series of joint moves. The Dow Jones Industrial Average and broader Standard & Poor’s 500 both tumbled more than seven percent initially, despite the news of worldwide government coordination. The top two Democrats in Congress, US Rep.
Nancy Pelosi and Sen. Harry Reid, urged Bush to call a G8 meeting “at the earliest opportunity” in a letter they sent him. “There is a sense of urgency that the United States take a leadership role in bringing together leaders of the largest economies to help avoid even more serious economic consequences,” the two legislators said. Treasury Under secretary David McCormick said Bush was “open” to the idea, but a date has yet to be set. Meanwhile, the White House confirmed that it is weighing the possibility of taking ownership stakes in banks to bolster its effort to restore confidence in financial markets.
“It would include an equity stake,” White House spokeswoman Dana Perino said, before adding that such action would come in the form of “capital injections that would actually be investing in banks, but not taking them over.” Perino said Treasury Secretary Henry Paulson was granted the authority to buy stakes in the banks as part of the Bush administration’s USD 700 billion bailout package to rescue the financial sector.
Bush launched the largest US government intervention in history with his bailout package to stave off further economic damage caused by the crumbling financial industry, but Paulson said it would take time to work and that some banks would fail nonetheless. Meanwhile, American homeowners were losing homes to foreclosures at a record rate and complained there was no bail-out or relief for them, and Europe was still staggering over the near-collapse of some of its biggest banks.
The crisis has sparked a historic tumble on Wall Street, plunging the stock market down by more than 30 percent so far this year. The turmoil has spread to international markets and prompted swift action by European and Asian governments aimed at containing the damage.
In addition to the G7 meeting, Paulson has agreed to a separate gathering Saturday of the Group of 20 - a wider bloc of advanced and emerging economies - to discuss the crisis. The IMF and World Bank also hold their annual meetings this weekend.