In early trading on Monday, the yen and U.S. dollar rose in a flight to safety on assessments that the meeting yielded no concrete moves to avert a looming global recession.
Governments from Washington to Beijing agreed Saturday to a host of fiscal and monetary steps to rescue the global economy but it was left to individual governments to tailor their response to their particular circumstances and troubled industries.
"Taken as a whole, it does not appear that the outcome of the summit will be sufficient to stem the financial crisis. This was a high bar from the start," said Marc Chandler, global head of currency strategy with Brown Brothers Harriman in New York.
In the United States, the lame-duck status of President George W. Bush's administration made guessing the likely ability of the Group of 20 economic summit to restore market confidence tougher.
President-elect Barack Obama sent emissaries to the weekend event, and issued a statement in support of a coordinated response to the global financial crisis. [ID:nN15476098]
The post-meeting statement from the grouping of major industrialized and developing countries contained a kitchen sink of reform pledges aimed at soothing volatile markets and calming consumers' worries. [ID:nN14403849]
It said that all financial markets, products and participants will be subject to supervision, vowed tougher accounting rules, a review of compensation practices and greater cooperation between national regulators.
Even the long-running Doha round of free-trade talks was given a new lease on life.
Canadian Prime Minister Stephen Harper termed the declaration enough to "give the markets reassurance."
Finance ministers were told to develop specific plans for implementing the recommendations. The first set of actions is to be completed by the end of March, and a follow-up meeting will be held by the end of April.
But others were skeptical.
"No concrete coordinated actions were announced that will change anyone's outlook for the world economy, inflation, exchange rates or interest rates as the markets reopen today," said Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York.
U.S. investors took a "show-me" approach on Friday, dumping stocks to guarantee a second straight losing week for major indices. Friday's close in the S&P 100 index was the lowest on a weekly basis since 2003, and the broad-based index is down almost 10 percent in November alone.
In contrast to the promises of the world leaders, the final handful of big third-quarter U.S. earnings reports due this week are likely to come footnoted with warnings about tough times immediately ahead.
CAR TROUBLE
With a $700 billion fund promised to stabilize the battered U.S. financial system, an urgent task for the outgoing Bush administration and its successor is how, or whether, to stem the possible death spiral of the "big three" automakers.
The Senate is due on Monday to begin debating emergency legislation to provide $25 billion in aid to General Motors Corp
Some see the price-tag as a bargain compared with the financial bailout; others have cried "moral hazard" and called for automakers to get their own houses in order, even if that means filing for bankruptcy.
At a time when most expect the U.S. jobless rate, now at 6.5 percent, to keep climbing, GM's top executive warned that failing to help would have a far greater cost than the aid the automakers are seeking.
"The impact on the whole U.S. economy would be devastating," GM's Rick Wagoner said in an appearance on a Detroit television station on Sunday. [ID:nN16459196]
Retired Gen Wesley Clark, in a New York Times opinion piece, termed the automakers' survival a matter of U.S. security. [ID:nN16292747]
President-elect Obama has termed help for the U.S. auto industry a high priority, but the two months between now and when Obama takes the reigns Jan. 20 could be crunch time.
Given the rate that GM is burning through cash, analysts at Barclays recently forecast the firm will fall below its minimum cash in the first quarter of 2009.
With the G20 governments now gunning for executive pay reform, some firms were voluntarily taking matters into their own hands. [ID:nN16457230]
The top seven executives at U.S. bank Goldman Sachs Group Inc.
NO FREE-LOADERS NEED APPLY
In Germany, Finance Minister Peer Steinbrueck tamped down expectations for help to whole industries suffering due to the financial crisis and its spillover to the broader economy.
On Friday, the euro zone's 15-nation economy was reported to have shrunk by 0.2 percent for a second quarter in a row, putting it officially in a recession.
"We cannot have crisis free-loaders. I can only warn managers against thinking they can take advantage of the situation," Steinbrueck told the Leipziger Volkszeitung newspaper. [ID:nLG341521]
Troubled German carmaker Opel, a unit of GM, has asked the federal government and German states to help it limp through its rough patch. Chancellor Angela Merkel is due to meet with Opel officials on Monday, and talks on the broader woes of the auto sector are slated for Tuesday.
Layoffs in the distressed financial industry have been an almost daily event, and on Sunday reports surfaced that U.S. bank JPMorgan Chase & Co
London's Sunday Telegraph reported the bank is preparing to fire thousands of workers worldwide, on a scale comparable to that of its rivals.
The evaporation of hundreds of thousands of jobs, and nervousness among those still employed, has slammed consumer confidence in the United States, taking retail spending down with it.
"The economy is in big trouble; so big that it's hard to find a precedent," said Chris Low, chief economist at FTN Financial in New York. (Additional reporting by Reuters bureaus worldwide; Editing by Tim Dobbyn) ((Ros.Krasny@thomsonreuters.com; +1 312 408 8592; Reuters Messaging: ros.krasny.reuters.com@reuters.net)) Keywords: FINANCIAL/
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