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IMF issues global warning

Marketplace Staff Apr 9, 2008
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IMF issues global warning

Marketplace Staff Apr 9, 2008
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TEXT OF STORY

Scott Jagow: There just seems to be no let-up in concern about the economy. Not here. Not overseas. Minutes from the latest Federal Reserve meeting indicate the Fed is worried. And then there’s this a report from the International Monetary Fund. Jeremy Hobson has more on that.


Jeremy Hobson: The IMF predicts the credit crunch in the U.S. will cost financial markets a trillion dollars in losses. Lenders are just unwilling to cover all the bad bets on mortgage-backed securities. The IMF’s Jaime Caruana outlined steps global financial institutions can take to ease the credit crisis. First and foremost, he said, they need to come clean on their bad investments. And, he said…

Jaime Caruana:: It will be necessary also that central banks continue to provide liquidity to financial markets in order to make sure that these financial markets continue to work.

But Michael Mussa at the Peterson Institute for International Economics says central banks outside the U.S. are more concerned about inflation than economic slowdown. And so far, they haven’t been as willing as the Federal Reserve to prime the credit pump with short term loans.

Michael Mussa:: Other countries are not yet seeing the situation as that serious.

Still, Mussa says the credit crisis will dominate the IMF’s spring meeting, which kicks off this weekend.

In Washington, I’m Jeremy Hobson for Marketplace.

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