The world's leading economic powers joined forces Thursday to inject more than $1 trillion into the world economy and strictly regulate financial markets in a concerted effort to end the global recession.
The consensus reached over two days by nations that came here with different remedies was hailed as a major achievement, even as leaders struggled to explain how regulating hedge funds or trying to limit corporate pay would create jobs back home.
"This is the day the world came together," said an ebullient British Prime Minister Gordon Brown, who hosted the summit meeting. "The issues that people thought divided us did not divide us at all."
The infusion of cash will come in the form of loans to developing nations and financing for stalled trade deals. The economic crisis has crippled world trade and had its most devastating impact on the poorest countries, from Africa to Eastern Europe.
There were no new pledges of direct government spending on top of nearly $2 trillion already committed, including about $800 billion in the United States. Brown said that, including International Monetary Fund loans and other aid, $5 trillion would be injected by the end of 2010.
The G-20 also agreed on landmark new regulations for shadow banking and hedge funds, resulting in publication by the IMF of a list of tax havens that do not comply.
President Obama played a last-minute role in negotiations over that list, publicly playing the middleman between France, which wanted the G-20 to demand such a list, and China, which did not.
The president lauded the result at a 53-minute news conference before a packed crowd of 800 journalists from around the world. It was his first event of that magnitude on the world stage since winning election in November.
Obama said the summit was "a turning point in our pursuit of global economic recovery."
"Today, we've learned the lessons of history," he said and called the quick action of nations coming together to address the issue a "historic" event.
"I have no doubt … the steps that have been taken are critical to preventing a sliding into a depression," Obama said. "They are bolder and more rapid than any international response that we've seen to a financial crisis in memory, and I think that they will have a concrete effect on our ability individually in each nation to create jobs, save jobs that exist, grow the economy, loosen up credit and restore trust in the financial markets."
Obama said some leaders at the summit blamed the United States for the economic crisis and he acknowledged that "some of this contagion did start on Wall Street." But overall, he said, there was a "constructive approach" among all the leaders.
He did not agree with Brown's characterization that the old "Washington consensus" of self-correcting markets was dead. "We just need to put in some common-sense rules of the road," he said.
"I think the patient is stabilized," Obama said of the global economy. "There are still wounds that need to heal."
Indeed, the joint agreement issued Thursday includes no additional government stimulus of the sort that consumed Washington debate during Obama's first days in office. Leaders agreed to do whatever is needed in the future.
The joint statement came from leaders who had publicly disagreed on the best ways to fix the world's slumping economy. While the United States had led the way in direct government spending, France and Germany held out for tough new regulations of the financial industry.
French President Nicolas Sarkozy, who had threatened to walk out of the summit if new regulations weren't tough enough, emerged a winner. By regulating hedge funds and cracking down on tax havens, the G-20 is putting the "madness" of deregulation behind and "redefining capitalism," he said.
The deal calls for a common global approach to deal with the "toxic assets" that have ruined banks' balance sheets — something the Obama administration already has proposed.
The $1 trillion in aid includes a $500 billion increase in loan authority for the International Monetary Fund; $250 billion in "special drawing rights" for developing nations; and $250 billion to finance trade deals.
The group will come together again this year, an indication its members don't think they've solved the crisis yet. But, Brown said, "we have begun the process by which it will be solved."