Q: Might the economic summit in Washington help ease economic pain in the U.S. and abroad?
It depends. Few observers expect major new initiatives to come out of the summit. But the spotlight could raise pressure on the U.S. and other countries to take their own additional steps. These could include more economic stimulus packages.
With the U.S jobless rate at a 14-year high of 6.5percent, Democratic leaders in Congress have been considering a second round of stimulus measures. But Bush has so far been cool to the idea. Aid to the Big Three U.S. automakers figures prominently in the Democrats' efforts, and they're weighing measures to bolster jobs and extend unemployment benefits.
Q: Which countries are represented at the summit?
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Besides the U.S., the participants are: Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Spain and Turkey. Other than Spain, those countries – plus the European Union – make up the Group of 20 industrialized and developing economies, or G-20.
Q: What are the key issues?
At the top of the agenda is the complex and delicate matter of how to overhaul the regulatory oversight of financial markets. The goal is to avoid the types of housing, credit and financial debacles now threatening to plunge the global economy into a deep recession. Many experts say the global crisis is a result, at least in part, of lax regulation.
The crisis erupted in the U.S. in August of last year as mortgage investments soured with the housing market's collapse, then spread to other countries. Banks and other financial companies suffered huge losses. Foreclosures soared. Troubles then seeped into other areas, crimping auto and student loans and locking up lending.
Q: Will there be a breakthrough on a regulatory overhaul?
Probably not. World leaders were preparing to adopt a modest action plan that leans more on the U.S. approach of boosting oversight of shaky financial markets than the European desire to increase regulation. A draft of the joint communique to be issued today contains several ideas for making global financial markets work better by making them more transparent and accountable to investors, sources said late Friday.
Among those is a commitment to more effective accounting rules, such as those governing how companies value their assets, a crucial topic when the rise of risky, murky financial products are seen as largely responsible for trigging the current crisis. Ahead of the weekend gathering, a White House group also strengthened oversight of complex financial instruments – derivatives and credit default swaps, a type of corporate debt insurance. The communique also is expected to call for improved international cooperation in the monitoring of markets and sharpened eyes watching for dangerous investing trends. Associated Press