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.
Antonio Borges, the head of the IMF's European department, told reporters Friday that if Greece continues with the austerity measures it has pledged to put in place, then the rescue funds will continue to be provided.
"They can count on full support if they are on track," he said at an IMF briefing. "If they are not on track, then I think they will see the support evaporate very quickly."
A Greek default could destabilize other financially troubled European countries, such as Portugal, Ireland, Spain and Italy. It would also deal a blow to many European banks, which are large holders of Greek government bonds. The concern is that the shock could result in a replay of what occurred when Lehman Brothers fell in September 2009, sending waves of fear throughout the global financial system that caused credit to freeze as banks stopped lending to each other.
Geithner has said the United States has a huge stake in seeing Europe succeed. The G-20 group discussed proposals Thursday that he has raised to expand the resources of the European bailout fund by using methods the United States employed during its own financial crisis in 2008-2009.
The G-20 communique spoke of trying to increase the flexibility of the rescue fund and maximize its resources but spelled out no specific ways to accomplish those goals.
The joint statement also said the G-20 nations planned to produce a "collective and bold action plan" to boost global growth and deal with high government debt that will be put together in time for a G-20 leaders' summit in Cannes, France, on Nov. 3-4. But it provided no details of what will be in the action plan.
Associated Press writers Gabriele Steinhauser, Harry Dunphy and Luis Alonso Lugo contributed to this report.