Obama goes to G20 summit for help

April 1, 2009 12:00:00 AM PDT
Thousands of protesters took over the financial district in London as world leaders searched for ways to bring the global recession to an end. The protesters largely took out their frustration out on the banks. They smashed out windows and tore out computers at the Royal Bank of Scotland.

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Protesters also stormed the offices of the Bank of England, and pelted police with eggs. Thirty people were arrested. Some bankers wore blue jeans to avoid a confrontation with the protesters which were made up of largely a collection of anarchists who oppose modern capitalism. They are calling this Financial Fool's Day.

The summit puts President Barack Obama on the world stage for the first time. He agreed to new arms control talks with Russia and accepted an invitation to visit China. The president's agenda is to restart the economy and because we now operate in a global economy, he's looking for some help.

In the simplest of terms, the president hopes to press European leaders to pump more money into their sagging economies. So far, Europe's leaders have rejected that idea, saying what's needed instead are tighter regulations on financial institutions that got us into this mess.

The question is, who is right?

"Well, the answer is everybody's right. The problem is you can't do everything immediately," says Former Clinton labor secretary and economist Robert Reich.

If Europe doesn't join the U.S. in stimulating the global economy, we could be in a for a longer, more painful recession, and if we don't do a much better job of regulating the kind of financial transactions that AIG and others cooked up, we're going to risk another crisis. What this means to Main Street was summed up pretty well by a guy who is about as close to the street as you can get.

"If the game isn't honest then people are still going to want to play, but if they don't have anything to play with, the game is over. So I'd have to say put more money back into the economy," says Sean Williams, a Jewelry vender.

Oakland attorney Wendell Goddard says it's not that hard to figure out.

"The immediate need is to get more money circulating in the economy both in the United States and abroad," says Goddard.

At the Verse sneaker boutique, they had a similar notion.

"I think we need some regulation as well, but we definitely need the money," said store manager Dennis Thomas.

ABC7 Political Analyst Bruce Cain, Ph.D. says the president's priorities resonate with American voters.

"The stimulus package is politically smart because at a minimum, it's at least going to ease the pain," said Cain.

But Reich questions the president's emphasis on kickstarting financial institutions, saying that even if you get banks lending again, most people have already borrowed as much as they can.

"They're worried about keeping their jobs and their health insurance and their homes. Nobody is in the mood to do a lot of borrowing these days," says Reich.

That is also another reason why the president so badly wants a larger European stimulus effort. He wants to get them buying again and perhaps even buying American goods. But there's a lot of opposition to that, especially from Germany which fears government spending could lead to inflation. Germany remembers what happened 80 years ago when hyper-inflation helped lead to the rise of the Nazis.

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