World Money Chief Calls for Global Action

IMF head foresees widespread slowdown, backs US stimulus
By Jim O'Neill,  Newser User
Posted Jan 28, 2008 10:55 AM CST
Germany's Chancellor Angela Merkel, Juan Somavia, secretary general of the International Labor Organization ILO, and Dominique Strauss-Kahn, managing director of the International Monetary Fund IMF, from...   (Associated Press)
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(Newser) – With a global recession looming, the head of the IMF has warned bankers meeting in Davos, Switzerland, that lower interest rates alone won’t avert a crisis, the Financial Times reports. Dominique Strauss-Kahn called on governments to follow the US in easing fiscal policies, reversing a quarter-century of emphasis on tight spending. IMF forecasts due this week show a “serious slowdown” globally, he said.

"I regard this as a recognition of the gravity of the situation that we face," said ex-US Treasury Secretary Larry Summers. Merrill Lynch head John Thain, meanwhile, told the group the subprime crisis battering Wall Street is spreading to credit card and consumer loan markets: “We are likely to see another wave of problems on the consumer-credit side,” he said.