Keeping the Titanic Afloat: World Leaders Meet to Discuss Financial Crisis

Nov. 15, 2008 — -- Entering closed-door meetings with leaders of the world's wealthiest nations in an effort to chart a shared course out of the global financial crisis, President George W. Bush today praised the readiness of the leaders to come together and struck a carefully measured tone in describing the goals of the forum.

"I am pleased that we are discussing a way forward to make sure that such a crisis is unlikely to occur again," Bush said. "Obviously, you know, this crisis has not ended. There's some progress being made, but there's still a lot more work to be done."

The meeting attendees represent 90 percent of the world's gross national product, with participation by leaders of 19 of the world's wealthiest nations and the European Union.

It is an unusual international effort to address the global financial meltdown. The countries attending include Germany, the United Kingdom and South Korea, along with the so-called "BRIC" countries (the emerging economies of Brazil, Russia, India and China). Representatives of the International Monetary Fund and World Bank will also attend.

The leaders of the "G-20" have not met in 11 years.

"It is a very important symbol, and symbolism is important because one of the issues we are dealing with right now is a general collapse in confidence," said Eswar Prasad, a professor at Cornell University and former IMF official, speaking on a panel today. "Coordinated action on this front can bring about more changes."

German Chancellor Angela Merkel told reporters that the leaders hoped to agree on a plan "that includes almost 50 actions that have to be implemented by the end of March. ... The point is that all actors on the market, all products and all markets shall be really regulated and surveyed."

The plan would include measures aimed at making the global financial system more accountable to investors and more transparent to regulators, diplomatic officials said.

It would improve international monitoring of markets and bolster rules governing how companies value their assets, a current weakness seen as partly responsible for the financial crisis at hand. The officials spoke on condition of anonymity because leaders had yet to agree on their final statement.

While the emerging plan would boost oversight of fragile financial markets, it would fall short of the sweeping set of tough new regulations some Europeans want.

"These are difficult talks," British Prime Minister Gordon Brown said. "I think it's obviously important to move people to decisions ... about what can be done."

The financial crisis has impacted economies around the world: Stock markets are volatile, growth has shrunk and countries like Germany fear that they are already in a recession.

In his weekly radio address, released to the media in advance of its scheduled Saturday broadcast, Bush called the summit "a decisive moment for the global economy."

While championing moves his administration has made toward thawing the credit markets, the president also warned against what he views as too much intervention into the free market .

"We must recognize that government intervention is not a cure-all," he said. "While reforms in the financial sector are essential, the long-term solution to today's problems is sustained economic growth. And the surest path to that growth is free markets and free people."

A number of world leaders have argued that under-regulation in the United States kicked off the crisis, and they are expected to push for stricter oversight as they meet this weekend.

But experts have warned that playing the blame game and arguing about regulation will not help.

"The least constructive thing the G-20 can do right now is to assign blame," Prasad said.

Short Summit

The entire summit will last less than 24 hours -- with a working dinner Friday night, followed by closed meetings on Saturday.

The White House has repeatedly emphasized that the meeting is simply the first in a series. Adding to the low expectations game, White House spokeswoman Dana Perino said, "nothing is going to be solved overnight."

ABC News political analyst Rick Klein said setting the bar low makes political sense.

"There's a real danger that if they don't get enough done in here and they don't take enough big substantive steps, that the markets will respond negatively and say, 'This is just words. This is not action,'" Klein said.

That could easily make the economy worse.

Experts also concur that promises will have to be made with caution.

"Now is not the time to build Titanic," said Wing Thye Woo, a senior fellow at the Brookings Institution. "Now is the time to keep it from sinking."

Out of Time?

Bush is also working against the clock. With just about two months left in office, much of the world is perhaps more interested in the way his successor plans to govern the economy.

President-elect Barack Obama will not attend the summit. He has dispatched two advisors, former Secretary of State Madeline Albright and former Rep. Jim Leach, D-Iowa, to be on hand in Washington, though they, too, will skip the meetings. The president-elect's transition team has repeatedly said it is important to focus on one president at a time.

The Associated Press contributed to this report.