- The Washington Times - Sunday, October 12, 2008

The handiwork of the world’s top finance ministers and central bankers gets its first meaningful review as stock markets around the world are poised to reopen Monday after a week of record losses and bank failures.

U.S. Treasury Secretary Henry M. Paulson Jr. and his G-7 counterparts offered few concrete proposals to stem a global credit crunch over the weekend, instead appealing for global unity and decrying any isolationist or protectionist sentiment in the face of world credit crunch.

“Isolationism and protectionism will not offer a way out,” Mr. Paulson told a meeting of the World Bank’s Development Committee on Sunday. “Although we in the United States are taking many extraordinary measures to ease the crisis, we are not pursuing policies that would limit the flows of goods, service or capital.”

Related article:Paulson: Protectionist policies won’t solve crisis

Democratic lawmakers used Sunday’s talk shows to urge the Treasury Department to move quickly in fulfilling a pledge to make direct purchases of bank stocks and unfreeze lending. They also began to lay the groundwork for a post-election lame-duck session to consider the second major stimulus package for the U.S. economy this year.

“We are going to do a stimulus,” House Financial Services Chairman Rep. Barney Frank, Massachusetts Democrat, told ABC’s “This Week.” “I think the stimulus package is to give the middle class and the average citizen the same kind of relief that we tried to give to the financial sector.”

House Speaker Nancy Pelosi and the Democratic leadership in Congress are eyeing a $150 billion package, designed to give the economy a boost in the face of job layoffs and plunging stock values.

House Minority Whip Rep. Roy Blunt, Missouri Republican, said he was open to a stimulus program “that made sense.”

“But let’s not use the stimulus package as an excuse to do what Democrats have wanted to do from Day One of this Congress, which is a huge public works plan,” he added.

Coordinated action to date — including last week’s synchronized move by the Federal Reserve, the European Central Bank and four other central banks to slash interest rates — has failed to reverse the market slide or thaw frozen credit markets.

Since the beginning of the month, all three leading U.S. stock indexes — the Dow Jones index of industrial stocks, the Nasdaq and the Standard & Poor’s 500 — have lost at least 20 percent of their value. The S&P 500 was off 18.2 percent last week alone, its worst weekly loss ever. U.S. stocks staged a late rally Friday afternoon, ahead of a critical meeting of G-7 finance ministers. But some analysts say the weekend G-7 meetings, including a Saturday afternoon White House summit with President Bush, produced a lot of rhetoric but few concrete proposals.

“The markets wanted maybe more assurance that there would be a unified global backstopping of the banks, and it doesn’t sound like that’s in there,” Kim Rupert, managing director of global fixed income for San Francisco-based Action Economics LLC, said.

French Foreign Minister Christine Lagarde said of the G-7 joint statement, “Some of us hoped it had had more teeth or more muscles to it, but at least it was endorsed.”

In Paris, European leaders gathered Sunday in a second bid to coordinate policies to halt market sell-offs across the Continent.

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