Word: plan
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...based on their experience, Japanese analysts believe that actions to date have been insufficient. They say that in addition to the U.S. Treasury Department's plan to spend $700 billion buying bad assets from banks, the government also needs to recapitalize banks using taxpayer money. Only then will confidence in the financial system return, ending the current paralysis in lending that threatens the entire economy. "Taking nonperforming loans out of the balance sheets is not enough," says Jun Saito, director general of the economic-research bureau for Japan's cabinet. "What we've learned [in Japan] from the 1990s...
...holding - no other firms unraveled. In Washington, black SUVs and town cars of the G-7's central bankers and Treasury officials rolled into town, bringing with them the hope that the people with the power to fix things - assuming there are such people - will collectively figure out a plan. On Friday, some investors even dared to start talking about the possibility of a market bottom...
Maybe. The G-7 Finance Ministers and central bankers met in Washington this afternoon and issued what they called a plan of action, although it was a curiously action-free plan. In fact, the document they produced was only an opaque statement of principles, devoid of action. "We commit to continue working together to stabilize financial markets and restore the flow of credit, to support global economic growth," the statement said. No specifics were mentioned. They may be, over the weekend, away from the glare of global stock markets...
...officials were quick to back the nonaction plan. "Behind the principles are an expectation of action, just not a detailed plan for action," said a White House official. President Bush tried to put a positive face on things in a statement on the economy Friday morning, but all he could manage was to argue that through the international meetings, "the world is sending an unmistakable signal: we're in this together, and we'll come through this together...
There's absolute agreement that banks have to be recapitalized. Britain, for one, has already done so, offering its big banks $692 billion in capital in return for preference shares. U.S. Treasury Secretary Henry Paulson announced this evening that the U.S. is working on a plan to go this route, saying that it intends to use some of the $700 billion rescue package passed by Congress to pour money (with some strings attached) into any bank that needs funds. But Japan and E.U. countries like Germany have been reticent...