Now, I believe that the degree of international cooperation that we can get will determine how quickly all our economies can recover. If there is stimulus in one country and it’s repeated in another country, and repeated in other countries, then you can magnify the effect of that stimulus round the world, both for the benefit of the individual country that’s making it and for the rest of the world. And if you can see the coordinated cuts in interest rates coming together, then you’ve got to push for recovery and for new economic activity. And if you can see the banks, which operate internationally, being cleaned up in every country, then you have a situation where the world will feel confident and there will be trust in the banking system for people to resume saving, investing, and preparing for the future.
So I believe the level of international cooperation will be one of the major factors that will determine how quickly we can recover. But what we are determined to do is, in this difficult time, protect people in their jobs, make sure that we can get money to mortgage holders and to businesses, and of course make sure that countries that are in peril at the moment, who don’t have their own resources and aren’t able to restructure their banking systems, are given resources from the world to enable them to do so.
So the way forward is not to do nothing. The way forward is to take the action that’s necessary.
PRESIDENT OBAMA: I agree with everything that Gordon said. It’s been said repeatedly that every financial crisis comes to an end. So it will come to an end at some point. The question is, what have been the costs and how long the downturn.
I think people should take heart from the fact that governments have learned lessons from the ’30s, central banks have learned lessons from the ’30s. There has been much swifter action, much bolder action, much more coordinated action even prior to this summit than we have seen in previous financial crises. And that means that the prospect of restoring world growth and trade are that much greater.
I do think that Gordon is absolutely right — how well we execute it in the months to come, how well we button down these regulations, how well we each in our own respective countries help banks to deal with the impaired assets that they have on their books so that they can start lending again to businesses and consumers, how effective we are in managing the huge outflows of capital from emerging markets and provide a buffer for very poor and developing countries that are seeing huge contractions in their trade and just don’t have a lot of margin for error, how well we reform our international financial institutions so that they can be a more effective player in this whole process — all those things will help determine whether this ends up being a slow-rolling crisis that takes a lot more time to cure, or whether we start seeing significant recovery.