World Leaders Discuss Global Financial Crisis

Last night President Bush welcomed almost two dozen leaders from around the world, of both developed economies and emerging markets, to the White House State Dining Room for a working dinner to discuss the global financial crisis. For most of today, they will continue to meet at the first Summit on Financial Markets and the World Economy. Leaders of the World Bank, the International Monetary Fund, the United Nations, and the Financial Stability Forum are also attending.

The objectives of the summit are to address the current global financial crisis, as well as to lay the foundations for reform to prevent a similar crisis from ever happening again. The president acknowledges that there are too many complex issues to tackle all at once, and so this will be the first in a series of meetings.

They are focusing on five key objectives - understanding the causes of the global crisis, reviewing the effectiveness of the government's responses thus far, developing principles for reforming financial and regulatory systems, launching a specific plan of action to implement those principles, and reaffirming the conviction that free market principles offer the surest path to lasting prosperity.

Leaders will also discuss how to take actions to strengthen the global economy over the long-term. Some of these reforms to be considered include making the financial markets more transparent, by improving accounting rules for securities so that investors know the true value of what they're investing in. Also to be considered is more regulation for financial products, markets, and firms to reduce the overall risk to the financial system, an assessment of the current rules governing market manipulation and fraud, and ways to strengthen cooperation between the world's financial authorities.

The president said that while cooperation among governments from around the world was important, that government action will not be a cure-all. "History has shown that the greater threat to economic prosperity is not too little government in the market, it is too much government involvement in the market." He also said that "the aim was not for more government, but for smarter government."

The global financial crisis, originating in the U.S. mortgage market, was spawned by easy credit for consumers and poor risk management by financial institutions through the housing boom. Now world leaders scramble to find a solution as fearful consumers cut spending and economies contract.

President-elect Barack Obama is not attending the summit out of respect for President Bush, saying that "There's only one president at a time." Obama has ten more weeks to go before he's sworn in as president, and won't be obligated to follow through with Bush's ideas on dealing with the world's economic problems.




Source:
The White House