Obama, Geithner: Recession requires global action

WASHINGTON -- Treasury Secretary Timothy Geithner this weekend will seek backing from G-20 nations for a one-two punch of economic pump-priming and regulatory reform to combat the worsening global financial crisis.

Speaking to reporters Wednesday, Geithner downplayed an emerging split between the United States and its European allies. The U.S., which is spending $785 billion to jump-start its economy, wants other countries to more aggressively help boost global demand. European officials instead appear more concerned with crafting regulatory changes to prevent future collapses.

Geithner said the goals are "complementary," adding: "The world really is moving together now."

At the White House, President Obama underscored the need for a coordinated approach. "It's very important to make sure that other countries are moving in the same direction, because the global economy is all tied together," the president said.

A meeting Friday and Saturday of finance ministers and central bank chiefs will pave the way for a G-20 leaders summit in London on April 2. Representing about 90% of world output, the G-20 includes major industrial nations, as well as China, India, Mexico and Saudi Arabia.

The meeting comes as economic conditions continue to deteriorate. Global industrial production is plummeting at an annual rate of 25% to 30%, even faster than in the fourth quarter last year, JPMorgan estimates.

The U.S. wants the G-20 countries to agree to spend 2% of annual economic output to boost demand. So far, the U.S. and China are doing so. But major European countries have fallen short, with Germany spending 1.5% of gross domestic product, the U.K. 1.4%, and France just 0.7%, according to the International Monetary Fund. Europe, however, has more generous unemployment and social programs that automatically pump money into lagging economies. U.S. demands for more spending are "not to our liking," Luxembourg Finance Minister Jean-Claude Juncker said this week.

Dan Price, who handled international economic matters for President George W. Bush, said summit participants risk falling behind the fast-moving crisis if the dispute lingers. "If there is a difference of opinion, that difference does need to be ironed out," said Price, a partner at law firm Sidley Austin.