Bush Says Nations Must Act Together to Confront Economic Crisis

By Catherine Dodge

Oct. 11 (Bloomberg) -- President George W. Bush said the economic crisis is affecting people around the world and governments must be sure not to take actions that contradict or interfere with one another.

``This is a serious global crisis and therefore requires a serious global response,'' Bush said today at the White House after holding talks with finance ministers from the Group of Seven industrial nations.

``The United States has a special role to play'' in confronting the turmoil in financial markets, the president said with the financial officials from the world's wealthiest nations arrayed behind him. ``Our government will continue using all the tools at our disposal.''

The finance ministers and central bankers met yesterday in Washington, their first gathering since stock indexes this month plunged more than 20 percent from Japan to Europe to North America.

In a statement after their meeting, the policy makers from the U.S., Japan, Germany, U.K., France, Canada and Italy issued a statement saying they would ``take all necessary steps to unfreeze credit and money markets'' without detailing how that would be accomplished.

The officials promised to ensure major banks have access to cash and are able to tap public funds for capital.

U.S. Treasury Secretary Henry Paulson indicated that pumping government funds into banks is a priority and said financial markets will remain volatile.

`Clear' Trend

``We see the need -- a clear, present need -- to raise capital,'' Paulson said yesterday at a press conference after yesterday's meeting. ``We need to restore confidence.

The purchases of stock, the newest part of a rescue plan engineered by Paulson, would be aimed at sustaining banks and other financial institutions through the worst credit crisis in seven decades.

The U.S. Congress last week passed legislation allowing the Treasury secretary to spend as much as $700 billion to buy mortgage securities and other troubled assets and to purchase equity in banks. Paulson declined yesterday to give a timetable or details about the purchases.

The Dow Jones Industrial Average posted its biggest weekly drop in the history of the 30-stock average as officials from the U.S., Japan, Germany, U.K., France, Canada and Italy met for the first time since the financial crisis spread last month. Stocks in Europe and Japan had the biggest weekly drop in at least 21 years.

Bush's statement today was his second on the financial crisis in as many days as he looks to reassure Americans that their government is taking action to solve the credit crisis that is creating widespread uncertainty throughout the global economy.

Bush's predecessor, former President Bill Clinton, also convened with the G-7 finance ministers during a 1998 financial crisis.

To contact the reporter on this story: Catherine Dodge in Washington at Cdodge1@bloomberg.net.