Asian stocks dropped to a four-year low and the European market fell for the third day yesterday as the financial crisis continued to take its toll¹ across the globe.

Stocks fell in Asia because of growing concerns that the weakness of emerging markets would prolong the global financial crisis.

To find a way to overcome the crisis, US President George W. Bush has called a summit of G20 leaders in the Washington area on November 15.

White House spokeswoman Dana Perino said on Wednesday: "The leaders will review progress being made to address the current financial crisis, advance a common understanding of its causes, and, in order to avoid a repetition, agree on a common set of principles for reform of the regulatory and institutional regimes."

The nose-diving global market prompted former US Federal Reserve (Fed) chairman Alan Greenspan to tell Congress yesterday that he was "shocked" at the breakdown² in US credit markets, and to concede that he had been "partly" wrong to resist regulation of some securities.

Despite the worries he had in 2005 that risks were being underestimated by investors³, "this crisis, however, has turned out to be much broader than anything I could have imagined", Greenspan said in remarks prepared for delivery to the House of Representatives Committee on Oversight⁴ and Government Reform.

Initial trading on Wall Street yesterday, however, saw extended gains, with the Dow briefly⁵ jumping 3 percent, as beaten-down energy shares benefited from a gain in oil prices.

But the overall index for emerging markets lost 3.7 percent, reaching the lowest point since 2004. The Japanese yen⁶ lost 2.46 percent, after having even gone down by as much as 7 percent during the session. Seoul lost 7.4 percent and Hong Kong 4.7 percent, its lowest point since April 2005.

The financial crisis continued its destructive spree in the banking⁷ sector⁸, with Goldman Sachs Group Inc planning to cut 10 percent of its staff, or almost 3,300 jobs.

A source familiar with the development said Goldman Sachs had suffered less than most of its peers because of the global financial crisis, and remained the leading adviser⁹ to mergers¹⁰ and initial public offerings worldwide.

But its transition from an investment to a traditional bank holding company means the Fed would use its new regulatory authority to limit the bank's risk taking and encourage longer-maturity funding.

Bush has invited the leaders of G20, which includes the Group of Seven major industrial economies plus key emerging-market countries like China, India and Brazil, to find a way out of the crisis.

The heads of the International Monetary¹¹ Fund, World Bank, UN and the Financial Stability Forum¹², too, have been invited. Bush will host a dinner for the leaders in the White House the night before the summit.

The summit will take place just 11 days after the US presidential election, and Perino said the White House would seek input¹³ from the winner, either Republican John McCain or Democrat¹⁴ Barack Obama.

Some European leaders had pushed for a summit before the end of the year, and suggested a total overhaul¹⁵ of the financial system be considered. French President Nicolas Sarkozy had suggested the summit take place in New York.

"Everybody will come with their ideas and the president recognizes that every country is going to have a responsibility but not every country is going to have the same solution," Perino said. The US will have its own recommendations, she said. But she doubted whether the first meeting would produce a long-term solution.
Questions:

1. What was former US Federal Reserve Chairman Alan Greenspan’s reaction to the global financial crisis?

2. Who has Bush invited to a summit on November 15?

3. Goldman Sachs will undergo what kind of transition?

Answers:

1. He was shocked.

2. The G20 leaders as well as heads of the International Monetary Fund, World Bank, UN and the Financial Stability Forum.

3. From an investment bank to a traditional one.