US acknowledges downturn faults

The US carries a "substantial" share of the blame for the current economic crisis, Timothy Geithner, the US Treasury Secretary, has said.

But he said the world must work together to ease the crisis, with more balanced economic growth called for.

"Extraordinary policy responses" are needed to resolve the crisis, he said, as this was not a normal recession.

The International Monetary Fund (IMF) has warned global credit crunch losses could reach $4 trillion (£2.75tn).

"We bear a substantial share of the responsibility for what has happened," Mr Geithner said.

"We must set ourselves on a path so that one country, or group of countries, does not consume in excess while another set of countries produces in excess," he said.

Stressing that this was not a normal recession, he added: "Instead, it is an abrupt correction of financial successes that has overwhelmed economies' and markets' self-correcting mechanisms, and so can only be ended by extraordinary policy responses."

Mr Geithner was speaking in Washington ahead of a meeting of G7 finance ministers.

The IMF - which forecast that the global economy will slow by 1.3% this year - has said that even if urgent action is taken to clean up the banking system, the process will be "slow and painful", delaying economic recovery.

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