MW: Crisis is serious but can be solved, IMF head says
By Rex Nutting, MarketWatch
WASHINGTON (MarketWatch) -- The global economic crisis is "very serious" but can be solved with quick, forceful and cooperative policies, the head of the International Monetary Fund said Thursday ahead of the fund's annual meeting.
"We are on the cusp of a global recession," Dominique Strauss-Kahn said, warning that the recovery would be very gradual, with the beginning of the recovery coming in late 2009.
The first priority is to restore confidence in financial markets, with recapitalization of financial institutions essential, said Strauss-Kahn, the IMF's managing director.
There is no way out" without boosting the capital of troubled banks, he said.
Stauss-Kahn said policy makers must make sure their actions are comprehensive, with clear objectives to assure public accountability. The public, which is taking on the risks on the downside, should share in the upside as well, he said.
No one country can solve this problem by itself, he said, urging the European countries in particular to work together. "Cooperation and coordination is the price of success," Strauss-Kahn said.
Strauss-Kahn said the Group of Seven has been well-coordinated for the past year, capped by Wednesday's coordinated rate cut by six major central banks. But he argued that the G7 process, no matter how good it is, can't fix what's become a global problem affecting at least 60 countries.
