DATELINE DAVOS(s)

DAVOS, Switzerland, Reuters

Business leaders rattled by a slump in global markets urged the U.S. and other central banks on Wednesday to get a grip on the global economy and some accused the Federal Reserve of losing its nerve. With share prices tumbling again despite an emergency U.S. interest rate cut on Tuesday to counter fears of recession, top executives expressed alarm at an annual gathering in the Swiss resort of Davos.

"Central banks have lost control," said financier George Soros, echoing the concerns of many of the more than 2,000 business and political leaders arriving in the snow-clad mountain town for the World Economic Forum meeting. In a debate on the U.S. economy, 59 percent of participants agreed with a motion that central bankers had lost control. Another panel agreed a lack of international economic policy coordination was the biggest risk to the world economy in 2008.

Top Washington officials sought to counter the talk of a recession. Secretary of State Condoleezza Rice -- in a rare foray into economic issues -- said the U.S. economy remained in shape. "The U.S. economy is resilient, its structure is sound, and its long-term economic fundamentals are healthy," Rice said. David McCormick, U.S. Undersecretary of the Treasury for International Affairs, adopted the same tone. "While we continue to believe the U.S.

 economy will grow, it will grow at a slower pace and there is no doubt downside risks have increased," he said. But many executives said the surprise decision by the U.S. Federal Reserve on Tuesday to cut interest rates by 75 basis points looked like a panic move. "I'm sort of worried that all they did yesterday was to hit the snooze button. (This is) excessive monetary accommodation that just takes us from bubble to bubble to bubble," said Stephen Roach, Asia head of U.S. bank Morgan Stanley.

Lawrence Summers, a former U.S. treasury chief, was critical too: "It's hard to give a high grade (to central banks) for what's happened in the last six months." Another former head of the U.S. Treasury, John Snow, was more supportive of the U.S. central bank. "What yesterday's action shows us is the Fed is focused but they are aware of negative trends in the economy and prepared to take bold steps," he said.

Comments

Add New

Write comment
Name:
Email:	We don't publish your mail. See privacy policy.
Title:
	Please input the anti-spam code that you can read in the image.