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G-20 leaders pledge $1 trillion to revive global economy

LONDON — Struggling to bridge deep divides over how to revive a paralyzed global economy, the leaders of the world's largest economies pledged more than $1 trillion Thursday for emergency loans to contain the contagion. But they rebuffed President Barack Obama's bid for new stimulus spending and made no guarantees of success.

The Group of 20 industrial and developing countries agreed Thursday to bail out developing countries, stimulate world trade and regulate financial companies more stringently. Obama conceded there were "no guarantees" those measures would reverse the global downturn.

British Prime Minister Gordon Brown, host of the G-20 summit meeting, said the leaders had committed to $1.1 trillion in funds that would greatly increase the capital available to the IMF. The goal would be a revival in trade.

But the combination of loans and guarantees fell short of an injection of fresh fiscal stimuli into the economic bloodstream — the result of a division between Continental Europe and the United States over whether to act now or wait and see whether existing spending measures take effect.

The accord was more forceful in addressing the plight of emerging economies that had been sideswiped by the crisis than it was in addressing the recession in the largest countries where the crisis began.

The proposed remedies, some critics said, treat some peripheral effects of the crisis rather than its thorniest causes. On the critical question of how to grapple with trillions of dollars in "toxic assets" clotting the financial system in Europe and America, there was a declaration of goals but few specific actions.

Obama, for whom the meeting provided a high-profile debut on the world stage, projected contrition about America's role in starting the meltdown and extolled global resolve to find a way to end the downturn. The meeting, he said, exemplified the power of developing nations, heralding a new age in which decisions about the global economy will no longer made by an elite club of Western powers that have set the rules since the Bretton Woods agreement in 1944.

"Today, we've learned the lessons of history," Obama said. But he also said that getting more than 20 countries to agree to common steps was particularly hard because "each country has its own quirks."

The most concrete step was a $750 billion reinforcement of the resources of the IMF, which has emerged from years of waning relevance to become the first responder in this crisis, lending billions of dollars in emergency loans to many countries.

In addition, the leaders agreed to provide $250 billion in trade credits, needed to finance cross-border trade that has declined roughly 10 percent as a result of the credit crisis and the economic downturn.

U.S. investors seemed less cheered about a G-20 deal than about an arcane change in U.S. accounting regulations that would make it easier for banks to defer writing down the value of their most troubled toxic assets. Many financial experts had hoped that world leaders would address how to dispose of those assets.

If the queen reaches out to you first, then it's all good

Queen Elizabeth, whose life is defined by royal protocol, didn't appear to flinch when Michelle Obama seemed to depart from it.

Thursday's papers in Britain delighted in a grainy photo from a gathering at Buckingham Palace on Wednesday showing the American first lady with her arm around the queen. Touching a royal person is normally a no-no. When former Australian Prime Minister Paul Keating did it, in 1992, the British media dubbed him the "Lizard of Oz."

But the queen wasn't fazed by the first lady's affectionate gesture. In fact, the British monarch apparently had slipped her arm around her visitor's waist first, leading Obama to lay hers briefly across her royal hostess' shoulders. "The queen and the first lady seal a new special relationship," said the Times of London, which splashed the photo on its front page.

Los Angeles Times

G-20 leaders pledge $1 trillion to revive global economy 04/02/09 [Last modified: Thursday, April 2, 2009 11:35pm]
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