The current global financial crisis is the number one item on the agenda as President Obama makes his first trip overseas to attend the G-20 conference, scheduled to begin today.
In a public statement the President said he had come “to listen” and “not to lecture,” but it was clear that most of the nations represented at the conference are still looking for the U.S. to take a leadership role in resolving the worldwide financial meltdown. Obama warned however that those expecting the U.S. to remain a “voracious consumer market,” that will serve as the major outlet for the products of developing nations should look closer to home for a solution to their problems. He cautioned that the U.S. is unlikely to return to its recent consumption habits which led to both trade and budget deficits.
The President hopes to convince the leaders of other nations to mirror the U.S. approach and use government stimulus packages to kick start the world economy, an idea with strong support from the governments of Great Britain and Japan. In direct opposition are President Nicolas Sarkozy of France and Chancellor Angela Merkel of Germany who are calling for more regulation, but are resisting the calls for more spending. Sarkozy has taken a position he calls “nonnegotiable” on the need for a worldwide regulator to deal with international financial firms, while the U.S., Britain, and Japan all favor national systemic risk regulation.
In addition to the conflict of ideas among the major participants, there are also likely to be some areas of agreement, such as on the need to regulate hedge funds and to force traditional tax havens to become more transparent.
The Associated Press reported this morning that stock futures surged about 2% due to word from the conference regarding regulation and additional funding for the International Monetary Fund.