European leaders' response to the economic crisis has failed to calm markets, but G-20 leaders are hoping that their strong backing of growth policies will bring some relief.
Los Cabos, Mexico
The leaders of the world's largest economies will portray themselves as united behind efforts to boost growth and job creation in order to repair a global economy roiled by fears over the European financial crisis, according to a draft of the statement to be released today at the end of the Group of 20 annual meeting.
It's far from certain, however, that the reassuring words will soothe markets whose harsh judgment of the official response to the crisis appears to be pushing Europe closer to catastrophe by the day. Yesterday, less than 12 hours after a Greek election quelled fears that the country could make a devastating exit from the Euro, fears about Spain drove that massive economy's borrowing costs dangerously close to the level where it would need a bailout.
The statement by the G-20 leaders includes language that appears aimed at easing the Spanish crisis by reassuring investors that Spain's treasury won't end up eating the costs of the up to 100 billion euro rescue of Spain's banks announced this month. Fears that the responsibility of paying back the bailout would fall on its government helped drive Spain's borrowing costs above the dangerously high 7 percent level.
"Euro area members of the G20 will take all necessary policy measures to safeguard the integrity and stability of the area ... and break the feedback loop between sovereigns and banks," the statement says.
It also places the G-20 on the side of those who have been arguing for a focus on job creation, including through government spending, instead of the budget cutbacks and austerity pushed most notably by German Chancellor Angela Merkel.
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