WORLD 2 EUROS: EUR ON EUR OWN!
IT'S EVERY EURO-TRASH MAN FOR HIMSELF:
Sometimes the world seems against you, and other times
it just doesn't want to shake your hand while you're being
electrocuted with your fingers stuck in a light socket.
By Howard Schneider and David Nakamura
Hamilton Spectator Wire Services
(HS) - - CANNES, FRANCE - - World leaders attending the G20 summit sent a strong message to Europe on Friday that it must do more to manage its spiralling debt and financial problems but offered no explicit help, saying the region’s fate was in its own hands.
After two days of talks dominated by the crisis in Greece, the most tangible outcome was an agreement by the cash-strapped government of Italy to allow its economy to be intensely monitored by the International Monetary Fund.
Group of 20 leaders also said they would begin studying ways the IMF might provide faster help around the world in a crisis. They said the IMF could be beefed up to help more, but not for at least three more months.
Underlying those announcements was impatience about how long it is taking the 17-nation euro region to make key decisions, for example, about how to guarantee that Italy will not be abandoned by global investors and need a costly bailout.
“We ... urge rapid elaboration and implementation” of recent rescue programs that remain to be fleshed out, the group’s finale communiqué states.
The whole exercise was geared to forestalling a second global recession that some economists say is already gripping the United States and Europe.
Canadian Prime Minister Stephen Harper said there was “money sitting on the sidelines” that could revive the global economy, but none of it is Canadian tax dollars destined for a European bailout.
The G20 had kind words for President Barack Obama’s approach to U.S. economic troubles, saying his $447-billion proposal to spur job growth, which has been blocked in Congress, represents the kind of step that could invigorate the global economy in the short run. Deficit reduction, which the administration has set as a longer-run goal, is also important for heavily indebted countries, the group said.
China, meanwhile, agreed to move “more rapidly” to float its exchange rate and open up its financial system. Administration officials say the language represents a more serious recognition by China that its own economy is at risk from Europe’s problems. With demand flagging in the developed world, “China will rebalance ... towards domestic consumption by implementing measures to strengthen social safety nets, increase household income and transform the economic growth pattern,” a separate summit action plan states.
The focus of the conference was on Europe, where political turmoil in Greece has raised the risk of a fracture in the euro currency union. Seven of the G20’s members are European (six countries plus the European Union) but the crisis on the continent has come to represent a threat to the global economy.
Concerns have been rising that political paralysis in Italy could soon put the euro region’s third-largest economy in jeopardy. Investors have been demanding higher interest rates to lend Italy money, and the cost could soon become unsustainable for the government in Rome.
Amid high-level discussions about Italy’s plight, Italian Premier Silvio Berlusconi “invited” the IMF to complete quarterly reports about his government’s performance on controlling spending and carrying out economic reform. That level of oversight is more typical for countries under an IMF emergency loan program.
IMF managing director Christine Lagarde said the aim of those steps is to rebuild confidence that Berlusconi will follow through on promises to cut spending and make economic changes.
“The problem is a lack of credibility” that the plans announced by Berlusconi will be implemented, Lagarde said. The quarterly IMF reports will be about “verification, certification and implementation,” she said, adding that “it is now the IMF’s credibility that is a little bit on the line.”
You’re On Your Own, World Leaders Tell Europe