G7 plan to meet on the world financial crisis

With US stocks down for the 7th straight day and the Dow below 9,000 on Friday, it is clear to say that there is a world financial crisis, and the latest response is that the G7 have planned to meet in Washington for crisis talks to provide united action.

Prime Minister Gordon Brown has called for a world response to the financial crisis via a Loan Guarantee Plan.

The world economy is still facing the worst economic outlook for 25 years, and one of the proposals being put forward is that of Chancellor Alistair Darling for nations to guarantee lending between banks, and that call is also being championed by US Treasury Secretary, Henry Paulson.

The current action being taken is revolving around interest rate cuts and bank bailouts.

The financial crisis has become far worse over the last month and finance ministers and central bank representatives from the US, Japan, Germany, UK, France, Canada and Italy are meeting.

In order to increase stability and offer a safety net, the International Monetary Fund has activated an emergency financing mechanism to aid countries that run into trouble.

Despite the meeting, the G-7 leaders and finance ministers do face a dilemma as the money markets still remain locked and that does pose a huge problem because each country is already finding it increasingly difficult to stick to their own budget and borrowing needs with little scope to help others.

Currently the cost of borrowing over the last 3 months is the highest it has been over the last year.

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