IMF Says Leaders Will Do "Whatever Is Necessary" To Resolve Crisis

The major players of the G-20, IMF, and the World Bank gathered in Washington this weekend for the annual meeting of the International Monetary Fund. While there were no concrete plans announced to try and combat the growing debt crisis in Europe, the group of world leaders tried to present a united front in an effort to reassure skittish financial markets.

For example, via a communiqué from the IMF’s governing body, the group said Saturday, “Today we agreed to act decisively to tackle the dangers confronting the global economy.”

Another key sound bite out of the conference suggested that the leaders in Europe would do “whatever is necessary” to resolve the crisis.

However, there are apparently huge differences between the leaders about how best to actually resolve the crisis. Many investors, including legendary trader George Soros, feel that the Europeans simply do not have the capabilities or authorities in place to handle the crisis.

One key question discussed over the weekend is if the European Central Bank should commit more resources to shoring up Europe's banks and help struggling euro zone member countries while European officials focused on increasing the existing 440 billion-euro rescue fund – the EFSF.

According to MarketWatch, Bank of Canada Governor Mark Carney Canadian suggested in a radio interview that the ESFS fund should be increased to the neighborhood of 1 trillion Euros.

EU Commissioner Olli Rehn reminded the media that European parliaments would ratify plans to give new powers to the ESFS (Europe’s bailout fund), Fund, by mid-October – right about the time Greece is said to run out of money if a solution is not found.

According to AP, other G-20 countries want Europe to increase the size of the 440 billion euro fund. Officials said that proposals on how to do that were floated left and right over the weekend.

Speaking at the IMF gathering on Saturday, U.S. Treasury chief Timothy Geithner didn’t mince words, saying the risks to the current situation in Europe were enormous and urged leaders to take immediate action.

"The threat of cascading default, bank runs, and catastrophic risk must be taken off the table," Geithner told the group.

Unlike the last time Geithner spoke, officials said they were listening. “We have several options which we will further study,” Rehn said.

However, with many of the world’s stock markets already in Bear markets and the decline in U.S. stock market nearing the all-important -20% level, market players may be looking for more than just talk at the present time.

 

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