Obama reaches out to world to fix economic crisis

CHICAGO: President-elect Barack Obama Monday vowed his administration would reach out to foreign economic powers to fix a financial crisis that he said was spreading far and wide.

At a news conference, Obama unveiled the well-traveled Timothy Geithner as his nominee for Treasury secretary, and the internationally respected former Treasury boss Larry Summers as his top economic adviser in the White House.

"The reality is that the economic crisis we face is no longer just an American crisis, it is a global crisis - and we will need to reach out to countries around the world to craft a global response," he said.

"Tim's extensive international experience makes him uniquely suited for this work," he said, noting Geithner had spent much of his childhood in Africa, had studied in Asia and had worked as the Treasury's point man for global affairs.

"And having studied both Chinese and Japanese, Tim understands the language of today's international markets in more ways than one," Obama said of the New York Federal Reserve's current president.

Indeed, China and Japan are likely to play key roles as creditor nations financing the hefty and growing US budget deficit as Obama rolls out a costly plan to kick-start growth in the world's largest economy.



However, Japan is already in recession and China has its own priorities as it implements a stimulus plan worth nearly $600 billion to help the emerging Asian powerhouse weather the global finance crunch.

"China will make the biggest contribution to the world by maintaining the sound and steady development of its own economy," foreign ministry spokesman Qin Gang told reporters last week, referring to the package.

The United States, through the Treasury and Fed, has already been cooperating closely with authorities in Europe as the banking crisis exerts a transatlantic grip with both the economic giants now fearful of deflation.

Obama, who takes office on January 20, stayed away from a Washington summit on November 15 of the world's 20 biggest economies, but he vowed Monday to implement commitments made by President George W Bush.

Markets have shown little enthusiasm for a vague pledge from the Group of 20 leaders to join forces to galvanize growth and overhaul the world's financial architecture - work that would have to be enacted under Obama's watch.

On Obama's behalf, former secretary of state Madeleine Albright and ex-Republican lawmaker Jim Leach met G20 delegations and conveyed his "determination to continuing to work together on these challenges after he takes office in January."

The US president-elect, who is crafting his own stimulus package reportedly worth over $700 billion, said Summers would bring unrivaled global experience to his new job leading the powerful National Economic Council.

"As undersecretary, deputy secretary, and then secretary of the Treasury, Larry helped guide us through several major international financial crises," Obama said, also touting his contribution to the 1990s economic expansion.