Jose Luis Magana, Associated Press
WASHINGTON — The world's economic powers struggled on Friday to get on top of a European debt crisis that is threatening to dump the global economy back into recession.
Officials gathered for three days of discussion pledged to push forward to fulfill the goals of a program in which the Group of 20 major economies promised stronger cooperation to jump-start global growth and help Greece avoid a destabilizing default.
But private economists questioned whether the latest action plan unveiled by the G-20 countries Thursday night went far enough to deal with market concerns that a Greek default is a virtual certainty that threatens to destabilize other highly indebted European countries.
All of the discussions about European debt were occurring around the annual meetings of the 187-nation International Monetary Fund and its sister lending agency, the World Bank.
In advance of those talks, the G-20 finance officials, including Treasury Secretary Timothy Geithner and Federal Reserve Chairman Ben Bernanke, pledged a bold effort to deal with the debt crisis and encouraged Europe to move quickly to implement its promises to help Greece.
The G-20 statement had little impact on the market's sour mood, with stocks continuing to tumble in Asia and Europe. Wall Street, which saw the Dow Jones industrial average plunge 391 points on Thursday, initially headed lower on Friday but then stabilized.
In late afternoon trading, the Dow was up 6 points Friday, but private economists predicted more down days for stocks in coming weeks as investors continue to fear the consequences of a Greek debt default.
Jay Bryson, global economist at Wells Fargo Securities, contrasted the G-20 statement Thursday with the bold program the G-20 put forward in London in April 2009 at the height of that financial crisis with billions of dollars of support put forward to boost economic growth and provide a financial backstop for the IMF to rescue countries in trouble.
"You've got to back up words with actions," Bryson said of Thursday's statement, which he said was an example of "political paralysis."
Sung Won Sohn, an economics professor at California State University's Martin Smith School of Business, said the great concern is that if Greece doesn't make further painful cuts in government spending and ends up defaulting on its debt, the shock waves will rock big banks in France and Europe with heavy exposure to Greek debt and will cause fearful investors to flee the bonds of other heavily indebted countries such as Italy and Spain, countries with much bigger economies.
"The fear in the markets is that the problem will spread to much bigger economies such as Spain and Italy. Europe would not have the resources to handle a crisis of that magnitude," Sohn said.
The finance ministers at the Washington meetings said they believed that the 17 nations that use the common euro currency were getting the message that they needed to move much more quickly to reform their surveillance procedures and boost their economic support.
"The leading lights of the eurozone are aware that time is running out," British Finance Minister George Osborne told reporters on Friday. "There is a far greater sense of urgency than there was three weeks ago about the necessity for the eurozone to address its problems."
Canadian Finance Minister Jim Flaherty said that he had stressed during the G-20 discussions that "Europe will need an exercise of political will. We need decisiveness and we need clarity."
Investors are worried that Europe's debt crisis could destabilize the global economy at a time when growth has already slowed significantly due to a jump in oil prices earlier in the year and a pronounced slowdown in the United States, the world's largest economy.
Greece could default on its debt next month unless it receives a $10.9 billion installment from a bailout fund managed by the European Central Bank, the European Commission and the IMF.
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