U.S. Pushes Europe to Act With Force on Debt Crisis:
WASHINGTON - The Obama increasingly alarmed by the consequences of the financial crisis in Europe, began an intensive lobbying campaign to persuade German Chancellor Angela Merkel and other leaders to act decisively to stop the spread of the crisis debt in Greece.
In telephone calls and meetings over the last week, Obama urged Merkel and President Nicolas Sarkozy of France to take coordinated measures - including spending billions of additional funds to bail out of Greece and strengthen key European financial institutions - to prevent Greece's debt woes spread to its neighbors.
American pressure will be presented Friday and again this weekend at a gathering of finance ministers of the world in Washington.
However, administration officials downplayed the likelihood of concerted action, emerging as the meetings of the International Monetary Fund and World Bank. At best, they said, the ministers could lay the groundwork for a more daring in November, when the group leaders of 20 industrialized countries to meet in Cannes, France.
The lack of global action comes amid growing recognition that the debt crisis in Europe today is perhaps the biggest shadow looming over the global economy. Although trade with Europe is only a small part of the U.S. economy, Europe's problems repeatedly shaken Wall Street over the past year and a half, eroding confidence and fear of exacerbating the companies and consumers.
"The single biggest risk in the U.S. today is that the situation gets out of hand," said Edwin M. Truman, a former Treasury official now the Peterson Institute for International Economics. "Europe is not going to save the American economy, but it could be the straw that breaks."
Kenneth Rogoff, a Harvard economist who has written about the history of financial crises, is the effect of the Europe of the United States in convincing policy. "The pessimistic scenario is terrible," he said, "and if it happens before the U.S. election, an election that could take in one in which the president is a huge loser.
"Administration is hoping that the Europeans can drive on the road until now that the election is past," said Rogoff, who has advised Obama and the Republicans.
The administration has made much of his attention on the character you can have the greatest ability to influence outcomes in Europe: the German chancellor. Since taking office, Obama has met or spoken to Merkel 28 times - a rate that corresponds to someone who may have as much influence on his fortune to his rivals in Washington.
In his most recent appeal on Monday, Obama urged Merkel to throw fire more financial resources to the crisis. The conversation delved into the technical details, and the risk of financial contagion, a senior government official.
Mrs. Merkel faces formidable political obstacles - that Obama fully recognizes, this official said - to convince the German government to spend hundreds of billions of euros to save Greece, and perhaps other Mediterranean countries.
While the U.S. is to offer lessons of its own crisis in 2008, Treasury Secretary Timothy F. Geithner and other officials stepped carefully to avoid offending the Europeans who complain the U.S. has nothing to lecture. When Mr. Geithner attended a meeting of EU finance ministers last week in Wroclaw, Poland, a handful of officials from smaller countries attacked him after, but U.S. officials said the meeting was more productive behind closed doors.
Put pressure on the administration takes two main forms. The first is that in argument, with the support of many economists, that Germany has a lot of preservation of the euro in its present form rather than give up or standing, as it breaks.
By combining volume with the currencies of poorer countries such as Greece, Germany was able to be a currency more convenient than it would on its own and take much longer than it otherwise might. And exports, which make up a greater share of the German economy that the U.S. economy, recovery in Germany is the main engine.
The second part of the American effort of pushing European leaders to strengthen institutions at the heart of their response to the crisis: the European Financial Stability, which is the continent's biggest fund bailout, and the Bank Central Europe.
There is broad consensus among outside observers, including Americans, as Mr. Goolsbee, the current bailout fund of 440 million euros - about 600 billion - is not big enough. But there are doubts about the political and financial capacity of some countries to increase their contributions. Officials are concentrating instead on how to harness their power.
In a statement issued by the Group of 20 in Washington on Thursday, the finance ministers said that European governments are taking steps to make the fund more flexible and "maximize impact, to meet the contagion."
"We need the proper firewall to prevent contagion," Francis Baron, the French finance minister said Thursday. "We can discuss how to give the necessary strength."
An opportunity to make the fund more flexible proposed by U.S. officials, is a program where governments to use their combined resources to guarantee loans to investors who buy debt in the troubled country. The loans will be granted by the European Central Bank, but financing facility would absorb losses that use resources because it can secure the bonds with a total value far greater than its available funds.
Such a program would be a variant of an American effort, the term asset-backed securities loan agreement, or TALF which was driven by mixed results of the Treasury and the Federal Reserve in the wake of the crisis of 2008 -.
U.S. officials have also highlighted the role of the Fed in response to financial crisis special transport here, and urged Europe to look at the Fed model. It took trillions of dollars of loans so that investors may continue to buy and sell a wide variety of financial products.
The Fed also pressured on several occasions in interest rates to reduce borrowing costs for businesses and consumers. The European Central Bank has been more cautious, increased interest rates earlier this year.
"All the ways and means to tackle the situation is fairly well known," said Christine Lagarde, the executive director of the IMF in the early meetings. The challenge, she added, was "pushing the leaders in that much needed to take more action than what has already been done."
"There is a narrative that this is more a morality play that this is about fiscal profligacy in Southern Europe," said Austan Goolsbee, a former top economic adviser, Mr. Obama, who spoke to the panel on Thursday, the Fund International Monetary Fund. "But if the Germans say:" We do not consider costs in southern Europe, "must also recognize that they were major beneficiaries."
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| U.S. Pushes Europe to Act With Force on Debt Crisis |
In telephone calls and meetings over the last week, Obama urged Merkel and President Nicolas Sarkozy of France to take coordinated measures - including spending billions of additional funds to bail out of Greece and strengthen key European financial institutions - to prevent Greece's debt woes spread to its neighbors.
American pressure will be presented Friday and again this weekend at a gathering of finance ministers of the world in Washington.
However, administration officials downplayed the likelihood of concerted action, emerging as the meetings of the International Monetary Fund and World Bank. At best, they said, the ministers could lay the groundwork for a more daring in November, when the group leaders of 20 industrialized countries to meet in Cannes, France.
The lack of global action comes amid growing recognition that the debt crisis in Europe today is perhaps the biggest shadow looming over the global economy. Although trade with Europe is only a small part of the U.S. economy, Europe's problems repeatedly shaken Wall Street over the past year and a half, eroding confidence and fear of exacerbating the companies and consumers.
"The single biggest risk in the U.S. today is that the situation gets out of hand," said Edwin M. Truman, a former Treasury official now the Peterson Institute for International Economics. "Europe is not going to save the American economy, but it could be the straw that breaks."
Kenneth Rogoff, a Harvard economist who has written about the history of financial crises, is the effect of the Europe of the United States in convincing policy. "The pessimistic scenario is terrible," he said, "and if it happens before the U.S. election, an election that could take in one in which the president is a huge loser.
"Administration is hoping that the Europeans can drive on the road until now that the election is past," said Rogoff, who has advised Obama and the Republicans.
The administration has made much of his attention on the character you can have the greatest ability to influence outcomes in Europe: the German chancellor. Since taking office, Obama has met or spoken to Merkel 28 times - a rate that corresponds to someone who may have as much influence on his fortune to his rivals in Washington.
In his most recent appeal on Monday, Obama urged Merkel to throw fire more financial resources to the crisis. The conversation delved into the technical details, and the risk of financial contagion, a senior government official.
Mrs. Merkel faces formidable political obstacles - that Obama fully recognizes, this official said - to convince the German government to spend hundreds of billions of euros to save Greece, and perhaps other Mediterranean countries.
While the U.S. is to offer lessons of its own crisis in 2008, Treasury Secretary Timothy F. Geithner and other officials stepped carefully to avoid offending the Europeans who complain the U.S. has nothing to lecture. When Mr. Geithner attended a meeting of EU finance ministers last week in Wroclaw, Poland, a handful of officials from smaller countries attacked him after, but U.S. officials said the meeting was more productive behind closed doors.
Put pressure on the administration takes two main forms. The first is that in argument, with the support of many economists, that Germany has a lot of preservation of the euro in its present form rather than give up or standing, as it breaks.
By combining volume with the currencies of poorer countries such as Greece, Germany was able to be a currency more convenient than it would on its own and take much longer than it otherwise might. And exports, which make up a greater share of the German economy that the U.S. economy, recovery in Germany is the main engine.
The second part of the American effort of pushing European leaders to strengthen institutions at the heart of their response to the crisis: the European Financial Stability, which is the continent's biggest fund bailout, and the Bank Central Europe.
There is broad consensus among outside observers, including Americans, as Mr. Goolsbee, the current bailout fund of 440 million euros - about 600 billion - is not big enough. But there are doubts about the political and financial capacity of some countries to increase their contributions. Officials are concentrating instead on how to harness their power.
In a statement issued by the Group of 20 in Washington on Thursday, the finance ministers said that European governments are taking steps to make the fund more flexible and "maximize impact, to meet the contagion."
"We need the proper firewall to prevent contagion," Francis Baron, the French finance minister said Thursday. "We can discuss how to give the necessary strength."
An opportunity to make the fund more flexible proposed by U.S. officials, is a program where governments to use their combined resources to guarantee loans to investors who buy debt in the troubled country. The loans will be granted by the European Central Bank, but financing facility would absorb losses that use resources because it can secure the bonds with a total value far greater than its available funds.
Such a program would be a variant of an American effort, the term asset-backed securities loan agreement, or TALF which was driven by mixed results of the Treasury and the Federal Reserve in the wake of the crisis of 2008 -.
U.S. officials have also highlighted the role of the Fed in response to financial crisis special transport here, and urged Europe to look at the Fed model. It took trillions of dollars of loans so that investors may continue to buy and sell a wide variety of financial products.
The Fed also pressured on several occasions in interest rates to reduce borrowing costs for businesses and consumers. The European Central Bank has been more cautious, increased interest rates earlier this year.
"All the ways and means to tackle the situation is fairly well known," said Christine Lagarde, the executive director of the IMF in the early meetings. The challenge, she added, was "pushing the leaders in that much needed to take more action than what has already been done."
"There is a narrative that this is more a morality play that this is about fiscal profligacy in Southern Europe," said Austan Goolsbee, a former top economic adviser, Mr. Obama, who spoke to the panel on Thursday, the Fund International Monetary Fund. "But if the Germans say:" We do not consider costs in southern Europe, "must also recognize that they were major beneficiaries."
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