Best Growth Stock – The threat of a global recession, fueled by the debt crisis in the euro area, focused discussions today of finance ministers from more than one hundred countries gathered in Washington at the annual meetings of IMF and World Bank II.
The new head of the International Monetary Fund (IMF), France’s Christine Lagarde, again warned everyone that the world is facing “a moment”.
Last night, representatives of the major economies and emerging-advanced, members of so-called G20, unexpectedly issued a statement intended to reassure the markets, which reaffirmed its decision to “a strong and coordinated response” to current turbulence and the challenges facing the global economy.
The G20 was the forum for coordinated international response to the financial crisis in 2008 following the bursting of the housing bubble in America.
The mortgage crisis “subprime” ended up triggering the worst recession in the global economy since the Great Depression of the 1930s.
Now, the epicenter of the crisis lies in the heart of Europe, where the 17 nations sharing the euro are trying to avoid the collapse of public finances in Greece and the spread of instability to other much larger economies such as Italy or Spain.
The very survival of the euro has been called into question these days, to multiply the warning signs about the health of European banks exposed to the debt redeemed countries (Greece, Ireland and Portugal).
In his speech today before 187 members of the IMF and World Bank, the Spanish Deputy Prime Minister and Minister of Economy and Finance, Elena Salgado, asked “to look beyond volatility in the markets” and said, facing it, ” progress in fiscal consolidation and financial reform “taken in the eurozone and in Spain.
In his view, the agreement resulting from the July summit of the eurozone is “a set of comprehensive measures to address the roots of the crisis of sovereign debt.”
That agreement, he said, “improves the prospects for Greek debt sustainability. And, second, gives the European Financial Stability Fund new and more effective tools to ensure financial stability and prevent infection,” said Spanish Vice President, according to the text of his speech.
Environment Fuentes Salgado said that the Spanish financial institutions have already begun the process of recapitalization after the results of endurance test in Europe, and later this month all have reached a comfortable situation.
For its part, the British finance minister, George Osborne, told the media that members of the Eurozone are aware that “time is running out” to implement additional firewalls.
“There is a much greater sense of urgency than three weeks, and a lot of pressure on the eurozone by the entire international community,” said Osborne, whose country has not adopted the single European currency.
Despite all efforts, the message of the G20 last night, with little new content, it has not dispelled the nervousness and volatility in the markets.
Investors are fleeing risk, taking refuge in safer securities and currencies, driving down to the stock and push the U.S. dollar to record highs.
Although Lagarde said the “special responsibility” in the advanced economies-the EU, U.S. and Japan in particular, warned that emerging countries will not escape the crisis, if not acting in coordination.
“Make no mistake,” he argued, “the South is not immune to mistakes of the North”. “We’ve entered what I call a dangerous new phase,” he said.
In his statement last night, the G20 ministers and governors recognize that new risks “have become more uncertain climate for emerging countries”, which are adjusting their macroeconomic policies accordingly to maintain stability and sustain growth.
“We reiterate that excessive volatility and disorderly movements in exchange rates have adverse implications for economic and financial stability,” the statement said.
G20 members also stressed the promise that they will take “all actions necessary” to preserve the stability of the banking system and financial markets.
“We will ensure that banks are adequately capitalized and that have access to funding to address current risks,” promises the text.
Category: Business News