English, who is in the United States attending IMF and World Bank meetings, said there was little confidence in the effectiveness of measures announced yesterday by the US Federal Reserve to tackle weakness in the American economy.
"The general opinion is that it won't make much difference and actually it's time for the US Congress to sort out their tax system, start cutting their spending and get on top of their debt."
New Zealand was in a comparatively good situation having been cutting debt for some time, and it is important that international lenders understand that and continue to lend money, English told Radio New Zealand.
He said the overnight fall in the New Zealand dollar was good news.
Seven world leaders today implored Europe to act more decisively to stem its fiscal crisis.
"Euro zone governments and institutions must act swiftly to resolve the euro crisis and all European economies must confront the debt overhang to prevent contagion to the wider global economy," leaders of Australia, Canada, Indonesia, Britain, Mexico, South Africa and South Korea wrote in an open letter to France, currently chair of the Group of 20 leading economies.
The demand came as a European Central Bank study warned the entire euro currency project was at risk. The study was co-authored by ECB chief economist Juergen Stark, who resigned this month.
"Greatly increased fiscal imbalances in the euro area as a whole and the dire situation in individual member countries risk undermining stability, growth and employment, as well as the sustainability of [Europe's Economic and Monetary Union] itself," according to the research paper, published, though not endorsed, by the ECB, Reuters reported.
There were other dire predictions. Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., which runs the biggest bond fund, warned the world is on the eve of the next financial crisis, with sovereign debt its epicentre.
The European Central Bank hasn't put in place a "circuit breaker" to contain the region's debt crisis, El-Erian, who is also Pimco's co-chief investment officer, said at an event in Washington today, Bloomberg reported.
Benefitting from the turmoil was the greenback, still perceived as a safe-haven. The US dollar strengthened 1 per cent against a basket of major currencies.
Also drawing investors in droves were US Treasuries. Thirty-year bonds soared, pushing yields 18 basis points lower to 2.81 per cent in early afternoon trading in New York, according to Bloomberg Bond Trader prices.
"People are really scared," Justin Lederer, an interest-rate strategist in New York at Cantor Fitzgerald LP, told Bloomberg. "The market expected a curve twist, but not to this extent, and so we are seeing a strong long-end rally in bonds. And we are in the midst of a situation where every day the likelihood of a global recession creeps up stronger."
Raw materials were also hard hit amid concern about a global recession, with oil, gold, silver and copper all plunging today.
- WITH NZ HERALD ONLINE
