A year after global finance imploded, US President Barack Obama hosts a G20 summit starting on Thursday aimed at tightening regulations to ensure such a calamity never happens again.
As countries claw back from recession, led by growth in Asia, the onus on leaders gathering in Pittsburgh is to decide when to pull the plug on state stimulus packages and how to coordinate that move.
Hosting his first major summit, Obama will be keen to avoid an embarrassing clash over banker bonuses as he seeks to trumpet his message that a second “Great Depression” has been avoided, but harsh lessons must be learned.
With Japan, France and Germany officially out of recession and the US expected to follow this year, there is disagreement amongst world leaders over how best to proceed.
British Prime Minister Gordon Brown has urged trillions more dollars of state support over the coming year to restrain soaring unemployment. The Chinese, however, are worried about skyrocketing budget deficits, particularly in the US.
Obama’s top summit negotiator, financial adviser Michael Froman, said that Washington would urge G20 leaders to resist the temptation to end stimulus efforts too early.
“Pittsburgh is not intended to be a victory lap,” Froman said. “We will be underscoring the need to remain vigilant, to avoid premature withdrawal of stimulus.”
Obama issued a stark warning to banks a week before the summit, saying they must not ignore the lessons of the crisis and calling on Wall Street to support the most ambitious financial overhaul since the 1940s.
“As the US is aggressively reforming our regulatory system, we’re going to be working to ensure that the rest of the world does the same,” Obama said. “We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis.”
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