KEY POINTS:
President George W. Bush fervently defended United States-style free enterprise yesterday as the cure for the world's financial chaos, not the cause. He warned foreign leaders before the G20 summit not to crush global growth with restrictive rules.
"We must recognise that Government intervention is not a cure-all," Bush said from Wall St, setting his own tone for the two-day meeting that begins today in Washington seeking solutions to the economic crisis that has spread around the world.
"Our aim should not be more government," he told the business executives. "It should be smarter government."
The President acknowledged Governments share the blame for the severe economic troubles that have hit banks, homes and whole countries.
He spelled out his prescription, which includes tougher accounting rules and more modern international financial institutions. But he stopped short of the tighter oversight and regulation that European leaders want.
All his ideas came with a warning: Don't disturb capitalism.
"In the wake of the financial crisis, voices from the left and right are equating the free-enterprise system with greed, exploitation and failure," Bush said.
"It is true that this crisis included failures, by leaders and borrowers, by financial firms, by Governments and independent regulators," Bush said. "But the crisis was not a failure of the free-market system. And the answer is not to try to reinvent that system."
That warning about the dangers of too much Government intervention came not long after he championed the biggest bailout in US history: a US$700 billion ($1.24 trillion) taxpayer-funded plan to rescue the financial industry.
His Government has also signed off on costly rescues for housing, insurance and other financial institutions.
The US wields enormous clout in any global response to the economic crisis, and Bush is host for the weekend gathering, bringing together heads of state from the world's biggest economies as well as emerging nations. It is intended to be the first in a series.
But Bush's personal influence is waning.
In January, Democrat Barack Obama takes over as President. He does not plan to attend this summit, but he has authorised former Iowa Representative Jim Leach and former Secretary of State Madeleine Albright to represent him.
Obama's transition team says they will primarily be listeners on the periphery of the meetings.
Besides the US, the countries represented at the summit will be Argentina, Australia, Brazil, Britain, Canada, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey. Those countries and the European Union make up the so-called G20.
Australian Prime Minister Kevin Rudd said before he left for Washington that he would raise with fellow leaders his view that a system in which executives of financial firms are rewarded for maximising risk "cannot be sustained".
He said: "That's just dumb, it's wrong and it's bad."
Trade union leaders from participating countries planned to join US union leaders in meetings with several foreign heads of state, including Brazilian President Luiz Inacio Lula da Silva, and with IMF managing director Dominique Strauss-Kahn and World Bank president Robert Zoellick.
The labour leaders are calling for reregulation of global financial markets, an internationally co-ordinated fiscal stimulus and balanced economic growth to address income inequality.
