The most significant player now may be Chancellor Merkel, who has become something of a spokeswoman for Europe's view of the crisis, which calls for foregoing more stimulus – though adding cash for IMF protection of East and Central Europe – and stiffer regulation. In recent days, she's applauded Mr. Obama for backing Europe on regulation to stop toxic assets and tax havens, but she continues to say stimulus will not lead to "sustainable growth."
Her position flies in the face of a new World Bank report projecting global economic growth to shrink by 1.7 percent in 2009 – the first such contraction since World War II. The Paris-based Organization for Economic Cooperation and Development expects a 4.3 percent decline in growth for its 30 members.
But Merkel, diplomats say, has combined a profound German instinct against debt – and its accompanying inflation – with a widely held sentiment here that the US and Wall Street are to blame for creating the global crisis. Ahead of German elections in September, the chancellor is also arguing that Europe's social safety net already constitutes enough of a stimulus and a higher percentage of debt than what's been offered by the US and Britain.
"We were living beyond our means," Ms. Merkel said at a meeting March 28. "After the Asian crisis and after 9/11, governments encouraged risk taking in order to boost growth. We cannot repeat this mistake."