WASHINGTON — Faced with soaring oil prices, a falling dollar and the worst credit crisis in nearly a decade, the masters of global finance have a simple message for jittery markets: Be calm, we are keeping an eye on things.
It probably did not help, however, that the new assurances came exactly 20 years from the date of the worst market meltdown in U.S. history.
The meeting of finance leaders from the Group of Seven industrial countries coincided with the anniversary of “Black Monday,” Oct. 19, 1987, when the Dow Jones industrial average plunged by 22.6 percent, its biggest one-day percentage loss ever.
While U.S. Treasury Secretary Henry Paulson, Federal Reserve Chairman Ben Bernanke and their G-7 counterparts did not dwell on those long-ago events during their discussions Friday, the anniversary served as an eerie reminder that the global economy does not always perform as its handlers wish that it would.
It did not help that while the policymakers were holding their discussions in Treasury’s ornate Cash Room, the Dow Jones industrial average was plunging by 366.94 points, or 2.64 percent. It was the third-biggest point drop this year and reflected in part oil prices that momentarily climbed to a new record, above $90 per barrel.
The problems this year came to a boil when credit markets essentially froze on Aug. 9 as fear overwhelmed many investors.
Troubles that began in the market for subprime mortgages have spread to many other kinds of debt. The credit crunch has been similar in intensity to the crisis that hit the global economy in August 1998 after Russia devalued the ruble.
Paulson, speaking to reporters after Friday’s meeting, said the G-7 officials are watching market developments closely.
However, in their joint statement of goals, the officials essentially rehashed previous bland assurances about cooperation in such areas as limiting volatility in currency markets. Absent were any examples of where big differences in approach had been resolved.