European leaders for creation of a Britton Woods II

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From Fazle Rashid
NEW YORK, October 16: Record gains of over 900 points made by the Dow Jones on Monday, which many took as a signal of the beginning of the recovery, suffered anguish, dismay and frustration as losses on Tuesday and Wednesday almost wiped out the total gains.
Stabilization of the financial markets is a critical first step, but even if they stabilize as we think they will, broader economic recovery will not happen right away, the New York Times (NYT) quoted Fed chairman Ben Bernanke as saying.
The United States and major European nations are headed into a recession, one that could last many months, analysts predicted.
Bernanke made valiant efforts at reassuring the American people that Fed stands ready to use all its tools to combat the financial crisis.
American economy will emerge from this period but when he not could specify. The latest carnage in the Wall Street has lent urgency to the debate over what the government should do to soften the squall.
The crisis in the Wall Street has aggravated the fear that banks would sit on their dollars and starve the economy of capital, preventing businesses from securing finance for expansion. The US economy has lost 760,000 jobs since the beginning of the year, and more workers have seen their hours cut and shrinking pay packets.
Many economists now assume that unemployment currently running at 6.1 percent will swell to 9.0 or 10 percent by the end of the year. Recession is inevitable. This cannot be prevented. But what we can do is to avoid a very severe recession, analysts said.
Fed's Beige Book survey of economic condition revealed pervasive weakness, with tight credit, deteriorating consumer spending and a weak labour market.
Equity investors are disappointed and frustrated by the snail pace in the improvement of the credit markets in the aftermath of sweeping rescue plans provided by governments on both sides of the Atlantic. Financial stress remain at a very elevated level.
Investors pulled at least $43 billion from the US hedge funds in September. The industry which manages close to $2000 billion has experienced outflows during only a handful of months. JP Morgan Chase has estimated that hedge fund outflows could total upto $150 billion in the coming days
The European leaders in an unision have thrown their weight for the creation of a ' Bretton Woods 11'. They underscored the immediacy of a summit level meeting to ' redesign' the world's financial architecture. This could also be a good occasion to seal a long delayed global trade deal.
British Prime Minister Gordon Browne who considerably bolstered his sagging image by playing a vigorous role called for making best use of the present crisis to reform the multilateral lending institutions like the IMF.
IMF was conceived in 1944 in a meeting of the world leaders in Bretton Woods, New Hampshire, US and mapped out a post war financial order. Officials in Brusells indicated that the meeting could take place in New York as early as next month. An inappropriate time because there will be a President-elect in America.
Asia's response to the crisis so far involved shared strategies such as interest rates cut, stimulas package and emergency measures to halt stock market slides but has stopped well short of coordinated actions. the Phillippine president Gloria Macapagal has unveiled an idea of creating an emergency fund of $10 billion with supposed blessings of the World Bank. Macapagal claimed ASEAN together with China, Japan and Korea have lent their blessings to the plan.
The idea of an Asian Monetary Fund which was floated during Asian financial crisis in 1997 has been revived again. The IMF which calls for harsh measures oblivious of the political realties is very unpopular in the region. An effort by the ADB to come up with a quasi-basket currency has foundered.
George Bush is open to the idea of a summit but the White House is now focused on the immediate situation at the moment. The idea won support from French president Nicolas Sarkozy, German chancellor Angela Merkel and other European leaders. "We have seen international action to pump trillions of dollars into the banking system in the last few days," said an official adding getting "a world trade deal should not be beyond us."