Britain's Gordon Brown met with President Barack Obama Tuesday and urged international cooperation to stem the global economic crisis. Analysts examine Europe's financial fallout.
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In Washington to meet with President Obama, British Prime Minister Gordon Brown pressed for international cooperation to address the economic meltdown.
GORDON BROWN, prime minister, Britain: There is the possibility in the next few months of a global New Deal that will involve all the countries of the world in sorting out and cleaning up the banking system. And there is the possibility of the international institutions for the first time being reformed in such a way that they can do the job that people want them to do and deal with some of the problems that exist in the poorest countries of the world.
The leaders met against the backdrop of a second phase of the financial storm now sweeping through Britain and Europe. Markets there and throughout Asia have taken crushing blows of late, especially yesterday, where in the U.S. the Dow closed below 7,000 for the first time in 12 years.
Monday's bad news impacted both sides of the Atlantic, as American insurance giant AIG and Europe's largest bank, HSBC, each reported record losses, spurring huge market sell-offs.
Europe is swiftly sliding into recession. Businesses are closing, and banks are struggling with huge losses. The financial crisis has even sparked unrest in some countries over measures to deal with the downturn, but the scope of what ails the continent varies greatly from country to country and from Western to Eastern Europe.
That has left the 27-member European Union struggling to find unity. Just prior to a meeting of European Union leaders this weekend in Brussels, the Hungarian prime minister called for an E.U. fund of $240 billion to aid former communist countries in the region. He warned that the failure to do so would create a new breach in Europe as bad as the one of the Cold War.
FERENC GYURCSANY, prime minister, Hungary: It means that we should not allow a new iron curtain would set up and divide Europe into two parts.
But the meeting ended in discord, when Germany, which has Europe's largest economy, rejected a general bailout package for struggling countries. German Chancellor Angela Merkel.
ANGELA MERKEL, chancellor, Germany (through translator): I would not recommend talk about huge amounts of money. Rather, we have already shown — and especially by the example of Hungary — that we help countries that are in need and we will, of course, continue to do this. But I do not think that we can use the same measures for all Eastern and Central European countries.
Back in Washington today, Gordon Brown, the man who for 10 years managed Britain's treasury, was trying to set the tone for international action.
We've got a global banking failure, and it's happened in every part of the world. It's almost like a power cut that went right across the financial system, and we have got to rebuild that financial system.
We've got to isolate the bad assets. We've got to underwrite the financial system so that loans could start again to businesses and families. And we've got to get enough lending into the economy so that people — enough credit so that people are able to go about their normal business again.