G-20 ready to cut rates aggressively but very few nations believe a multi-decade worldwide depression can be avoided
Joe Weinman
Nov. 8, 2008

Canada's Central Bank joined the Fed, the European Central Bank, and the Bank of England in an unprecedented coordinated interest rate cut on Oct. 8 after the collapse of Lehman Brothers Holdings Inc. sent credit markets into seizure. But the worse is happening as we write this article. The financial avalanche is so rapid and heavy that all the measures of the central banks are failing rapidly.

The problem is not in Wall Street any more. The epidemic has spread deep into the main streets and is now hitting the narrow alleys into the common households.

Finance officials from the Group of 20 nations meeting in Sao Paulo today are discussing the possibility of further cuts in interest rates in a bid to limit the damage from the global credit crisis, Canadian Finance Minister Jim Flaherty said.

The G-20 is grim. The financial ministers know what they face – a total meltdown of the financial systems based on American Dollar and its financial infrastructure. A new American President can do little to stop the Tsunami called institutional bankruptcies all over the world.

Mexican Deputy Finance Minister Alejandro Werner today said his country's central bank, which hasn''t lowered borrowing costs since the credit crisis began 15 months ago, has scope to cut rates after food and commodities prices fell.

China cut its key interest rate for the third time in two months on Oct. 29 while the Reserve Bank of India on Nov. 1 lowered its main interest rate for the second time in two weeks.

Brazil, Russia, India, and China, the so-called BRIC nations, plan coordinated measures to increase trade and capital flows between their economies, Russian Finance Minister Alexei Kudrin said in an interview today. India, Russia, and Brazil have already injected funds into commercial banks and South Korea last week unveiled a ($10.8 billion) fiscal stimulus plan.

The BRIC nations now understand how America has built up this global financial infrastructure based on reckless printing of US Dollar and the so called ‘house of cards’ – the debt and spend infrastructure.

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