WORLD ECONOMY HOT NEWS

NEW YORK (Reuters) – Wall Street may struggle this week to build on its best weekly performance in almost 30 years as investors grapple with a raft of economic data, including the November jobs report, that will likely provide more evidence of a deep economic downturn.

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The more you make, the more's at stake. People accustomed to six-figure salaries are increasingly among those seeking jobs, as the financial sector crumbles and takes with it thousands of related white-collar positions. When Citibank announced recently that it was showing some 50,000 employees — many of them highly paid executives — the door, the departing bankers joined more than 20,000 whom Citigroup had already laid off this year. Then there's the chorus of layoff announcements from other financial firms from Morgan Stanley to AIG and suit-count cuts at nonfinancial firms from GM to Boeing. Overall, more than 2,100 companies fired at least 50 people in October alone, leaving some 230,000 people suddenly out of a job. That's why so many $200 pairs of shoes are out pounding the pavement.

But the hiring machine hasn't shut down altogether. Even as the number of Americans filing for unemployment benefits approaches a 26-year high, there are still a sizable number of jobs open for reasons unrelated to the economic turmoil. "With people leaving, retiring and taking other jobs, you still have to have a director of sales, a VP of marketing and a CFO position to fill," says Marc Cenedella, founder of TheLadders.com, a subscription service that lists jobs paying more than $100,000. "Companies may not be making expansionary or discretionary hires," says Cenedella of the high-end market, "but with natural turnover, there may be 3.2 million hires a year instead of 4 million in a normal market." (See pictures of America's hidden workforce.)

Companies looking to fill those key positions today, however, have the luxury of sifting through legions of qualified candidates. Mark T. Williams, a finance professor at the Boston University School of Management, says recruiters for finance and other high-skill jobs may find themselves receiving 50 or 60 résumés for an opening that may once have attracted just 10 or 20. Some employers may use their improved odds to fill positions faster, given the greater availability of eager high-end talent. That can mean wrapping up a candidate search in a few days to two weeks, rather than two weeks to a month, says Jory Marino, head of the North American region for Heidrick & Struggles, a Chicago-based executive recruiter. Overall, Marino says, the number of unsolicited contacts his firm is receiving from those seeking high-end jobs is up 50% over prior years. "The supply-demand imbalance certainly favors employers," says Mickey Matthews, who directs North American operations for Stanton Chase International, a global executive-search firm based in Dallas. "There's talent out on the street."

To land new spots before year's end, six-figure earners are increasingly supplementing their willingness to shift roles with old-fashioned networking. And they're not just calling old friends and recruiters; they're digitizing their Rolodexes. LinkedIn, a professional networking site, whose members' average household income is $109,000, now has 31 million members, with a million new members signing up every two weeks. Those searching for jobs can use the service to figure out what connections they have at a company that's hiring. At least one executive from every Fortune 500 company is now on the site, and one top tech firm actually used it this year to find a new CFO.

Another digital tool gaining steam among job-hunting white-collar types is TheLadders.com. The site now posts about 60,000 available positions, with openings for accountants, financial analysts and directors of sales as well as more unusual functions, such as senior-level food technologist, master black belt and business-strategy ninja. (See "Corporate Layoffs: The Worst Is Yet to Come.")

To get a leg up on the mounting competition, top-bracket job seekers are taking up new tactics, such as honing their résumé keywords, knowing that many recruiters are scanning thousands of résumés digitally rather than reading them one by one. To adapt to hurried, harried human-resources gatekeepers, accountants who haven't looked for a job for a decade have to update their résumés with key phrases recruiters are searching for, such as "Sarbanes-Oxley." Marketers, meanwhile, need to add terms like "search-engine optimization," while techies highlight Java and other programming-language skills.

Not everyone agrees on the best online job-search tactics, Cenedella says. Some still advocate a traditional four-paragraph cover letter, while others now favor a quick one-paragraph e-mail. And while résumé keywords are in, Cenedella says, video résumés are out. Some companies filling high-end posts fear potential legal challenges if they're required to prove they aren't using racial or cultural considerations in their decision-making process when screening videos.

Even among million-dollar-job seekers, simple mistakes are common. One frequent blunder execs make is writing and editing their résumés alone, without input from others. "Your labor is the most valuable thing you're going to sell," Cenedella says. "Would you have an amateur copywriter write copy for the most valuable product you have? Then why would you write your résumé yourself?" Whether or not they labor over their own résumés, high-income job seekers are often quick to make sacrifices. "When those looking for high-end jobs are struggling, they become amazingly tolerant," says Douglas Klein, president of Sirota Survey Intelligence, a New York City–based research firm. "They'll take work for which they're underpaid and overqualified. In that respect, they're just like everyone else." (See 10 things to do with your money.)

For those who still have their jobs, staying put sounds fine. "The grass doesn't necessarily feel greener on the other side," says Sandy Gross, founder of Pinetum Partners, a boutique executive-search firm based in Greenwich, Conn. Marino agrees. "There's more reticence about changing from company A to company B these days," he says, "the rationale being that the devil you know is better than the devil you don't."

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The best way to make sure you get up in time for the 5 a.m. early bird specials on Black Friday is never to go to bed the night before. That's how Christian Perdomo, 15, was able to snag one of the 200 free Samsung MP3 players that Old Navy gave away at its megastore on 34th Street in New York City, along with the $120 worth of clothes he had purchased by 6 a.m. But even though there were still some 200 people in line at dozens of registers by 10 a.m., Liz, a cashier, said, "I think last year was a little busier."

The Black Friday shopping frenzy was palpable in midtown Manhattan on Friday as dozens of clothing retailers touted their "door buster" sales of 50% or more off everything from diamond jewelry to cotton hoodies. Crowds even broke one of the doors at Macy's Men's Store. That paled in comparison to the death of a Wal-Mart worker in Long Island who reportedly got trampled to death by bargain hunters. But by mid-morning on 34th Street, many stores were half empty and some sales staff said they had noticed that shoppers were holding back this year. (Looking for the perfect Black Friday purchase? See TIME's list of the 10 best gift ideas.)

"It's slower. They're not buying the big stuff," said a sales person at Macys flagship store in Herald Square, who asked not to be named. A $400 diamond bracelet had been marked down to $99, but there were more sales people standing near it than customers. Instead, shortly after 7 a.m., a crowd was hovering around a display of costume jewelry priced at $9.99 each.

A block away at Steve Madden, manager Francesca Ruggiero lamented that the store hadn't even sold $4000 worth of footwear by 9 a.m., even though it had opened at 6 a.m., an hour earlier than last year. Next door, Victoria's Secret manager Linda Petar told TIME, "We're on target," although by 8:45 a.m. the shop had sold less than $80,000 worth of merchandise toward its goal of $650,000 for the day. Other stores, including Perfumania, Fossil and Aerosoles all looked fairly desolate by 8 a.m., despite the perky signs beckoning, "Come In. We're Open."

Yet even with the recession, some folks were still making big purchases. Millicent Davis, a nighttime home health aide in Long Island City, says she hits the Black Friday sales every year. Her hours got cut back from seven days a week to just three this year, but she still bought a $300 North Face jacket for her son at Macys. She decided to pass on a $128 handbag for herself, however. Across the street at Old Navy, Viviana Alonso, 26, was packing a red Samsonite suitcase full of handbags, sweaters, socks and shirts inside the entrance. On vacation from Caracas, Venezuela, she had just bought the $150 suitcase that morning, and estimated that she had spent about $1000 in all since 5 a.m.

While everyone said they had risen before dawn in order to take advantage of Black Friday deals, there was little consensus on whether they were really saving money overall. "The recession is on and we're trying to save money," said Renita Raghubir, 22, who had just splurged on some Guess and DKNY jeans. Meanwhile, her mother had purchased a $350 handbag for her 17-year-old sister, and there were still more purchases to be made.

As in past years, many shoppers' purchases were really gifts for themselves. Nicholas Luciano, 16, said he spent $400 that he had earned from an after-school job at McDonalds on six sweaters, three pairs of jeans and a pair of sneakers from American Eagle Outfitters. Although he bought one gift for his Mom, he still needs more. Now he has to find Christmas gifts for the rest of the family. Retailers can only hope that Luciano's Black Friday enthusiasm is contagious.

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By Michele Gershberg and Aarthi Sivaraman

NEW YORK (Reuters) – Thanksgiving Day means leisurely time with family for many Americans, but this year the slow economy has prompted some U.S. retailers to open on Thursday, a day ahead of the traditional start of the holiday shopping season.

The holiday weekend will test the strength of consumer sentiment, a main driver of the U.S. economy, as the country faces its worst financial crisis since the Great Depression.

Sales on "Black Friday", the day after Thanksgiving, once allowed some stores to move into the black for the year. The holiday shopping season runs through year end, with the lion's share of sales occurring up to Christmas Day on December 25.

But this year, stores from discounter Kmart to clothing chain Old Navy opened on Thanksgiving Day, hoping to capture business before the traditional roast turkey meal grows cold.

"It makes a lot of difference where you can save even $5," said Emily Ramsawak, a babysitter shopping at a Kmart in Manhattan with dozens of others. "My friends and I, we look for discounts. It helps a lot with the economy being so tough."

Retailers fear the shrinking economy and mounting job losses could cost them billions of dollars during the crucial season that brings in up to 40 percent of annual sales. Many started offering steep discounts on everything from clothes to electronics weeks in advance of Thanksgiving.

Tyra Reid said a shopping trip before sitting down to a holiday dinner was worth the trouble. Later, she planned to visit a shopping mall ahead of a midnight store opening.

"I got an excellent deal," she said of a half-price version of the video game Guitar Hero. "We'll get a good meal later."

Other retailers, from Wal-Mart Stores Inc to Best Buy were due to start their big sales in the early hours of Friday.

"Consumer spending on gifts for the holiday season is going to be down considerably," said Eric Anderson, professor of marketing at the Kellogg School of Management, Northwestern University in Illinois. "Black Friday will be the first indicator of how bad it's going to be."

THE WORST SEASON?

Experts predict this could be the worst sales season since the early 1990s as Americans hit by a housing slump and credit crunch make do with fewer holiday gifts.

Analysts polled by Thomson Reuters data have forecast that retail sales at stores open at least a year could fall 2.2 percent for November compared with 4 percent growth last year.

Excluding expectations for growth at discounter Wal-Mart, the expected decline is a more precipitous 6.6 percent.

Many retailers, from department stores like Macy's to specialty chains such as AnnTaylor Stores, are battling to retain loyal customers and eke out a profit as rivals cut prices up to 40 and 50 percent. Some are willing to sacrifice profit rather than risk losing clients for good.

"It's the retailers in the middle who are trying to avoid losing customers," said Anderson. "Macy's is worried about customers who have never spent a lot of money at Wal-Mart trying out Wal-Mart and liking it."

EARLY BIRDS

Nearly 45 percent of consumers plan to shop during the Black Friday weekend, according to a survey by the International Council of Shopping Centers. More than 80 percent of those shoppers expect to visit a discount store, while 78 percent said they would head to a department store.

Along with Kmart, owned by Sears Holdings, movie rental chain Blockbuster also opened on Thursday to tout electronics gifts such as Blu-ray players and game consoles this year, as well as toy stalwart FAO Schwarz.

Some consumers said they were putting a different emphasis on celebrating the holidays, focusing on time spent with family and friends rather than standing in line outside stores to purchase the latest hot toy or gadget on the cheap.

"I will not go near stores on Black Friday. People are crazy," said Lori Kirby, who was in Kmart to pick out a last-minute holiday outfit for her aunt. "Unless you get there first, it's like running with the bulls or something."

"I'll try to spend less," she said. "People go crazy buying

and spending, but that's not what the holidays are about."

Some have chosen to save money by crafting presents by hand or swapping goods gathering dust in the attic.

Others have the option of buying goods at firesale prices, after U.S. chains like Circuit City and Mervyns declared bankruptcy ahead of the holiday.

After a sharp sales decline for most of November, retailers hope shoppers have been waiting to open their purse strings when the Thanksgiving weekend brings better deals.

(Reporting by Michele Gershberg and Aarthi Sivaraman)

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By Keith Weir

LONDON (Reuters) – China warned on Thursday its economic downturn could threaten stability as pressure grew on the European Central Bank to make a big cut in interest rates to help contain the global financial crisis.

In India, emerging Asia's other economic titan, financial markets were closed after Islamist militants killed more than 100 people in the commercial capital, Mumbai.

Violence in India and political unrest in Thailand highlighted political risk as another potential threat to emerging markets battered by the global crisis.

A crisis that began last year with the collapse of the U.S. housing market has spread around the world, bringing several financial institutions to their knees and pushing the United States, Japan and Europe into recession or to the brink of it.

Unemployment is rising in many countries. ArcelorMittal, the world's largest steelmaker, said it would cut up to 9,000 more jobs, saving $1 billion a year.

Central banks around the globe have slashed interest rates to try to ease the flow of credit and restart stalled economies.

Economic sentiment in Europe's single currency zone hit 15-year lows in November and inflation expectations plunged, boosting the case for a big rate cut from the European Central Bank next week.

"The euro zone is in a deep recession, upping the pressure on the ECB to cut interest rates further," said Christoph Weil, economist at Commerzbank. "We envisage a first move next week on a scale of 75 basis points to 2.5 percent."

The ECB's president, Jean-Claude Trichet, said that pumping in billions into money markets was still vital and cutting back on the amounts is not yet an option.

MORE RATE CUTS

The Bank of England is also expected to cut rates by 50 basis points or more on December 4, a Reuters poll showed.

Benchmark rates are 3.25 percent in the eurozone and 3.0 percent in Britain, against 1.0 percent in the United States.

China's central bank cut interest rates by the biggest margin in 11 years on Wednesday in response to a crisis that is reining in its once runaway growth, bringing worries about social unrest as jobs disappear.

China's State Information Center, a government think-tank, forecast annual growth would slow to 8 percent this quarter from 9 percent in the third quarter, a cooling from double-digit rates recorded in the past five years.

The country's top economic planner said the financial crisis was still spreading and its impact was deepening in China.

"Excessive bankruptcies and production cuts will lead to massive unemployment and stir social unrest," Zhang Ping, chairman of the National Development and Reform Commission, told a news conference.

ArcelorMittal said it would launch a voluntary redundancy scheme for largely white collar-staff to make its job cuts, which could affect about 3 percent of its workforce.

AUTO-MAKERS REDUCE HOURS

German car maker Daimler AG plans to talk to labor groups about reducing working hours at four German Mercedes-Benz assembly plants from January until the end of April.

Should this step be implemented, at least 47,000 employees could have shortened work weeks, for which the German government would compensate wage shortfalls.

General Motors Corp aims to cut staff costs at its European operations by at least 10 percent, in part by reducing the number of hours employees work.

The number of German unemployed fell in November to its lowest level since 1992, but officials said a labor market boom was fading as recession hits Europe's biggest economy.

Fujitsu Siemens Computers plans to slash 12 percent of its workforce in Germany, or about 700 jobs.

In Britain, Woolworths put its variety stores business into administration, jeopardizing thousands of jobs.

European equities rose 2 percent, buoyed by sharp gains in Asia and the United States, but the grim economic reports pushed government bond yields in Europe to a three-year low.

U.S. markets were closed for the Thanksgiving Day holiday, but some retailers were breaking with tradition and opening to try to boost sales.

"Black Friday" -- the day after Thanksgiving -- normally marks the start of the U.S. shopping season in the run-up to Christmas. Its name comes from marking the point when retailers could move into profit for the year.

Despite trillions of dollars in financial sector bailouts, the world's banking system is still not strong enough to support the economy and avoid a recession, the head of Britain's financial regulator said told an Italian newspaper.

Adair Turner, chairman of Britain's Financial Services Authority, said the two key issues were bank capital strength and liquidity.

Japan's Norinchukin Bank said it would raise more than $10.5 billion to shore up its capital, the largest fundraising by a Japanese financial firm since the start of the global credit crisis.

(Reporting by Reuters bureaux worldwide; editing by Philippa Fletcher and Chris Wilson)

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The Federal Reserve is to inject another $800bn (£526.8bn) into the US economy in a further effort to stabilise the financial system.

US Treasury Secretary Henry Paulson said the stimulus package aimed to make more lending available to consumers.

About $600bn will be used to buy up mortgage-backed securities while $200bn is being targeted at unfreezing the consumer credit market.

Financial institutions are reluctant to lend, deepening the economic slowdown.

The situation has been exacerbated as the credit crisis has worsened.

Meanwhile US President-elect Barack Obama said budget reform was "imperative" with the economy in crisis.

"It is not an option. It's a necessity," he said.

'Troubling'

Key lending such as credit cards, car loans and student loans had essentially come to a halt in October, Mr Paulson said. He added that the new measures were aimed at getting these types of lending back to more normal levels.

"It will take time to work through the difficulties in our market and our economy and new challenges will continue to arise," he said.

"We are committed to using all the tools at our disposal to preserve the strength of our financial institutions and stabilise our financial markets to minimise the spill-over into the rest of the economy."

The announcement came as Commerce Department figures showed US economic output shrank between July and September at a faster pace than initially predicted, which the White House described as "troubling".

GDP fell at an annual rate of 0.5% in the third-quarter - from the 0.3% estimated a month ago - as consumers cut spending by the largest amount in 28 years.

"This is why we are having to take such bold actions," a White House spokeswoman said.

Meanwhile, the Standard & Poor's/Case-Shiller national home price index slumped by a record 16.6% during the quarter from the same period a year ago - taking prices down to levels not seen since early 2004.

Bail-out details

Under the latest rescue plan - which is in addition to the already-announced $700bn bank bail-out - the Fed is to buy up to $100bn in debt from the troubled mortgage giants Fannie Mae and Freddie Mac.

The central bank said it would also buy another $500bn in mortgage-backed securities - pools of mortgages that are bundled together and sold to investors.

The Fed said that the $600bn effort to support the mortgage market was being taken to reduce the cost of home mortgages and increase their availability.

It said the purchases of the mortgages and mortgage-backed securities would take place over a number of months.

In addition to the $600bn effort on mortgages, the Fed also unveiled a separate programme to help unfreeze the consumer debt market.

The central bank said it would lend up to $200bn to the holders of securities backed by various types of consumer loans, such as credit cards and student loans.

Analyst reaction

News of the latest massive financial rescue plan was generally welcomed.

"They are getting to the heart of the problem, it's clean, it's quick, it's direct. It's a good way to bring down mortgage rates, because at the end of the day they have to stabilise the housing market," said Todd Abraham of Federated Investors, Pittsburgh.

Robert Macintosh, chief economist with Eaton Vance, Boston, said: "If they can pull it off it'll make some people happy, but I don't know how effective it'll actually be."

Scott Brown, chief economist at Raymond James Associates, Florida, said: "Here is the Fed taking a bunch of debt out of the market, which doesn't hurt. I think it should it should help unblock the credit markets."

The severe financial crisis that is rocking global markets at the moment began more than a year ago with rising defaults on sub-prime mortgages, loans provided to borrowers with weak credit histories.

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By MATT APUZZO, Associated Press Writer

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Reporting from New York -- Wall Street appears to have put its "panic mode" on pause.

Stocks moved sharply higher for a second straight session Monday as the federal government's rescue of Citigroup Inc. and President-elect Barack Obama's pledge to enact a sizable economic-stimulus plan soothed investors' jittery nerves.

The Dow Jones industrial average leapt almost 400 points, bringing its two-day gain to nearly 900 points, or 11.8%. That's the best two-day gain since the Dow soared 16.6% in the two days following the Oct. 19, 1987, market crash.

Market watchers reacted cautiously to the rally, however, pointing out that stocks had been beaten down so badly in last week's fear-driven sell-off that any rebound was likely to be strong.

"Bear-market rallies are like this -- they're huge. It's not a new bull market," said Phil Roth, market analyst at brokerage Miller Tabak & Co.

Roth said the rally was triggered by Obama's strongly worded promise to boost the economy, while the naming of his economic team removed a smidgen of uncertainty shadowing the market.

"The financial issues are being addressed," Roth said. "Right now, people are happy that something is being done."

Financial stocks were perhaps the biggest beneficiary of the government's agreement Sunday to guarantee more than $300 billion in Citigroup's troubled assets.

The Standard & Poor's financial-sector index bounded a record 18.5%, and Citigroup jumped $2.18, or 58%, to $5.95.

But the market and especially the financial sector are likely to remain under pressure, experts said.

Stocks experienced a similar surge in early October, but the rally lacked staying power. Indeed, the record one-day gain for the Dow was 11.1% on Monday, Oct. 13, in response to an earlier financial rescue effort cobbled together on a Sunday night.

Some saw danger signs in the Citigroup bailout. The need for the government to backstop a large chunk of assets at a major bank illustrates the depth of potential losses facing other financial giants, noted David Ellison, chief investment officer of the FBR mutual-fund group.

"It tells you that conditions are not good," Ellison said. All the big banks "ate at the same table the last five years."

Under the rescue plan, the government agreed to invest an additional $20 billion in Citigroup, on top of $25 billion previously committed. It also agreed to absorb the first $29 billion in losses of a portfolio of $306 billion in deeply troubled assets.

After that, the government would shoulder 90% of any additional write-downs, with Citigroup responsible for the other 10%.

Citigroup's stock plummeted 60% last week. Although the giant bank had sufficient capital to cover near-term losses, it appeared to come under fire from short sellers who profit from falling stock prices.

That eroded confidence in the company and risked setting off an exodus of customers and trading partners.

Other large financial institutions -- including JPMorgan Chase, Bank of America, Goldman Sachs and Morgan Stanley -- are in better financial shape than Citigroup, lessening the odds that their stocks could be targeted.

But then, few people expected Citigroup's stock to come under assault a week ago.

"Anybody is vulnerable to attack," said Anton Schutz, head of Mendon Capital Advisors in Rochester, N.Y.

Some analysts said that although the government would continue to bail out companies considered too big to fail, it would let smaller institutions collapse, potentially setting a double standard in the banking industry.

"What's worrisome about this one is that they'll have to let some medium-size bank go just to show that not everyone can get" a bailout, said Martin Mayer, a banking expert at the Brookings Institution.

Investors' continued uneasiness was on display in the Treasury market, where the yield on three-month T-bills remained at a low 0.015%. That shows that investors are willing to give up virtually any return on their money in exchange for having a safe place to park it.

The Dow rose 396.97 points, or 4.9%, to 8,443.39. The Standard & Poor's 500 index climbed 51.78 points, or 6.5%, to 851.81, and is up 13.2% in the last two trading sessions.

The Nasdaq composite index advanced 87.67 points, or 6.3%, to 1,472.02.

Sectors that do well in an economic recovery -- such as consumer-discretionary items and materials -- rose strongly.

Energy stocks moved up, helped by a $4.57-a-barrel increase in the price of crude oil to $54.50.

Among bank stocks, Bank of America rose $3.12, or 27%, to $14.59. Goldman Sachs rocketed $14.11, or 26.5% to $67.42. Morgan Stanley shot up $3.33, or 33%, to $13.38.

Hamilton is a Times staff writer.

walter.hamilton@latimes.com

Obama unveils economic team

The typically cautious experts have been asked to use radical means to fix the economy. PAGE A1

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Nov. 21 - President Bush makes his final trip abroad as US President as he heads to Peru for the APEC summit.

The meeting of the Asia Pacific Economic Cooperation forum in Lima, Peru, is unlikely to produce any major breakthroughs for a lame-duck U.S. president with record low approval ratings. Deborah Lutterbeck reports.

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Nov. 20 - Democratic congressional leaders demand auto executives provide a business survival plan in exchange for their support for up to $25 billion in loans

Senate Majority Leader Harry Reid says no one has come up with a plan that can be passed by Congress and signed by the president. Jon Decker reports.

SOUNDBITES:
# Senate Majority Leader Harry Reid
# House Speaker Nancy Pelosi
# United Auto Workers President Ron Gettelfinger

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Nov 23 - Global financial crisis remains at the forefront of the Asia Pacific Economic Cooperation summit in Lima.

As the APEC meeting draws to a close 21 leaders from Pacific Rim economies backed free trade to help ease the economic crisis.

The leaders are meeting at a time when economies around the world are taking a slamming from the crisis.

The group includes Russia, Indonesia, Australia, Canada. Mexico and the U.S. The member states account for more than half of global output.

Basmah Fahim reports.

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Nov. 24 - The British government set 20 billion pounds of tax cuts and spending increases between now and 2010 to help boost economy.

Prime Minister Gordon Brown and his Finance Minister Alistair Darling announced sweeping measures to halt a deepening recession, including billions of pounds of borrowing.

Benet Allen reports.

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Nov 24 - The government's huge bailout of Citigroup could fail to restore investor confidence, says a noted finance professor.

Previous government rescues of financial institutions like AIG and Morgan Stanley sparked similar stock market rallies, but those proved short-lived.

Fred Katayama reports from New York.

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Experts Say Bankruptcy May Be 'Only Viable Option' for Auto Industry

By CHRIS BURY

The chorus for an auto industry bailout is building, and the Senate took up the issue of a $25 billion emergency loan for automakers, to be paid for out of the $700 billion economic rescue package.

General Motors, Ford and Chrysler, who, earlier this month, made an urgent plea to lawmakers for cash, say they need a government lifeline to survive. House Speaker Nancy Pelosi said Saturday that House leaders would secure aid for the auto industry, "to ensure their long-term economic viability."

"You've got to have this interim support, as every other country with an automobile industry is going to do. No other country with an automobile industry will allow it to go down," said Sen. Carl Levin, D-Mich., on NBC's "Meet the Press" Sunday.

But for GM and perhaps Chrysler, two of the Big Three auto companies, the possibility of bankruptcy -- a once unthinkable outcome -- is gathering steam.

"I think bankruptcy may be the only viable option," said Michael E. Levine, professor at New York University School of Law. "GM can't reduce the number of its dealers. It can't dispose of a lot of property. It can't reorganize its contracts without the protection of the bankruptcy court."

Chapter 11 of the U.S. Bankruptcy Code allows for a company "makeover" under court supervision. But it's not your grandfather's liquidation bankruptcy.

"It doesn't mean close the doors, lock it up, sell it off," said Levine. "It means reorganize, financially. Americans at this point are fairly used to dealing with companies that are in reorganization."

Bankruptcy, Levine argues, gives companies greater leeway to restructure and emerge stronger. Bankruptcy protections could, for example, let GM out of its expensive union contracts that pay $71 an hour in wages and benefits, compared to the $47 that Toyota pays.

And under bankruptcy law, the company could rewrite contracts with dealers and drop less profitable brands to concentrate on newer, more fuel efficient models, like the Chevrolet Volt.

"It's really better to focus on your most successful brands and products," said Paul Ingrassia, former Dow Jones executive and Detroit bureau chief for the Wall Street Journal. "So instead of having eight brands with 20 percent of the market, why not have two or three?"

Bankruptcy Offers Chance to Restructure

Ingrassia favors a third option somewhere between bankruptcy and bailout, something akin to a U.S. receivership, like the Air Transportation Stabilization board that kept some U.S. airlines in business after Sept. 11.

"The government made money on the warrants it got in return for its assistance, and the airline industry was able to reorganize," said Ingrassia.

But the multibillion-dollar question remains: will consumers plunk down $25,000 to $50,000 for cars built by a bankrupt company when they have so many other choices?

Opponents of a bailout argue that Americans continued to fly through multiple airline bankruptcies. And while a bankrupt automaker may lead to more failures and job losses among businesses that depend on it, other companies with U.S. operations, including Toyota and Honda, might pick up the slack.

A bailout, on the other hand, could mean billions of dollars in taxpayer money that companies could pour back into failed models for the same mediocre results.

"Basically, what you'd be doing is putting the money in a failed business model, frankly," Ingrassia said. "These companies did not run into trouble just because of the mortgage meltdown and the financial crisis. They really started losing tens of billions of dollars as early as 2005."

Bankruptcy supporters say that a GM that survives Chapter 11 may emerge as a leaner, more efficient company. "The promise of a GM down the road that can stand on its own feet, support dealers, support workers and build cars that people want to buy," said Levine.

Washington confronts a painful choice: a bailout that risks wasting taxpayer money, or a bankruptcy that offers only the hope of a fresh start, but no guarantee.

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By Jake Tapper

Per ABC News' Kirit Radia, President George W. Bush today made the first known phone call between a sitting American President and Libyan leader Muammar al-Gaddafi, "a man responsible for hundreds of American deaths and who President Reagan once reviled as 'this Mad Dog of the Middle East.'"

The purpose was to thank Gaddafi for following through with the $1.5 billion settlement deal for the 1980s-era victims of Libyan terror acts.

"The President called Libyan leader Colonel Qadhafi to express his satisfaction that the claims settlement agreement was fully implemented on October 31. The two leaders discussed that this agreement should help to bring a painful chapter in the history between our two countries closer to closure," NSC spox Gordon Johndroe said in a paper statement. "While we will always mourn the loss of life as a result of past terrorist activities, the settlement agreement is an important step in repairing the relationship between Libya and the United States. Libya has taken important steps on the road to normalizing its relations with the international community, beginning with its renunciation in 2003 of terrorism and weapons of mass destruction. The United States will continue to work on the bilateral relationship with Libya, with the aim of establishing a dialogue that encompasses all subjects, including human rights, reform, and the fight against terrorism."

And believe it or not, Seif al-Islam Gaddafi -- Muammar's son -- will meet with Secretary of State Condoleezza Rice at the State Department tomorrow, to deepen the ties between the United States and Libya.

-- jpt

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Tuesday's Leadership Elections Determine What Happens to Lieberman's Posts
By JONATHAN KARL

Tuesday is D-Day for Connecticut Sen. Joe Lieberman.

At 9:30 a.m., Democratic senators (no staff allowed) will file into the old Senate chamber for leadership elections and other party business. The first item on the agenda will be Lieberman's fate, discussing whether he will be punished for the perceived transgressions of supporting Republican Sen. John McCain's presidential bid, attacking President-elect Barack Obama during the campaign and, worst of all, giving money to the campaigns of Republican Sens. Norm Coleman, R-Minn., Gordon Smith, R-Ore., and Susan Collins, R-Maine.

Democratic sources tell ABC News there is a tentative deal that will punish Lieberman, but not as severely as many of his colleagues had hoped.

"It's peace, love and understanding time," said one Senate Democrat. "There's a general feeling of, 'Let's get beyond this and reconcile.'"

Lieberman was re-elected to his Senate seat in 2006 as an independent after losing Connecticut's Democratic primary, but he aligns with the party within the Senate.

Under the arrangement, Lieberman would keep the chairmanship of the Homeland Security Committee, but he would lose his chairmanship of a subcommittee of the Environment and Public Works Committee, known as the Private Sector and Consumer Solutions to Global Warming and Wildlife Protection. It's a subcommittee with a lot of words in its name, but not a lot of power.

Lieberman's office has refused comment on this, but ABC News has been told that he has privately expressed a willingness to accept this minor demotion.

This is not a done deal. There will be a secret ballot vote on the arrangement during Tuesday morning's meeting.

Lieberman will keep his other chairmanship on the Airland subcommittee of the Senate Armed Services Committee. That will leave him as the chairman of one full committee and one subcommittee -- not bad for a guy who gave a prime time speech at the Republican National Convention two months ago.

For context and comparison, Sen. Hillary Clinton, D-N.Y., chairs only one subcommittee. She is, however, a lower ranking member of Lieberman's Airland subcommittee.

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Group Pledges Cooperation to Restore Growth

Washington Post Staff Writers
Sunday, November 16, 2008; Page A01

World leaders holding an emergency meeting to combat the economic crisis agreed yesterday to a far-reaching action plan that, over the next 4 1/2 months, would begin to reshape international financial institutions and reform worldwide regulatory and accounting rules.

The leaders' 11-page statement spoke of broad principles, leaving the details to be worked out by lower-level aides before another summit meeting in April, after Barack Obama assumes the presidency. But the gathering in Washington of the nearly two dozen nations -- from every region of the world -- reflected the new balance of power emerging in the aftermath of a financial crisis that has devastated even well-run economies, a wrenching process that British Prime Minister Gordon Brown has dubbed "the birth pangs of this new global order."

Under the plans outlined by the leaders, countries such as China, Brazil and India would gain greater roles and responsibilities as part of a restructuring of the international financial system, while European leaders won a commitment to new regulations and controls on banks, rating agencies and exotic financial securities. The leaders also agreed that a dramatic failure of market oversight in "some advanced countries" was among the root causes of the financial crisis, an implicit rebuke of the United States.

"I'm a free market person," President Bush told reporters after the summit ended, "until you're told that if you don't take decisive measures then it's conceivable that our country could go into a depression greater than the Great Depression."

The Europeans got "virtually everything" they sought at the summit, French President Nicholas Sarkozy crowed afterward at a news conference. He said it had been difficult to persuade Bush to hold the summit, but the results were worth it. "America is still the No. 1 power in the world," he noted. "Is it the only one? No, it isn't."

The leaders, representing the Group of 20 economic powers, Spain, the Netherlands, the United Nations and other international organizations, met over dinner at the White House on Friday. They then continued their discussions yesterday arrayed in a square in the central hall of the 19th-century National Building Museum, beneath soaring 159-foot high ceilings.

"We are determined to enhance our cooperation and work together to restore global growth and achieve needed reforms in the world's financial systems," the leaders declared in their communique.

The leaders agreed to set up a new regulatory body, "a college of supervisors," to examine the books of major financial institutions that operate across national borders, so regulators could begin to have a more complete picture of banks' operations. They demanded greater scrutiny of hedge funds and the completion of a clearinghouse system to help standardize and limit risk on some of the opaque and exotic financial derivatives that helped bring down Wall Street's investment banks.

Leaders also agreed to submit their countries' financial systems to regular, vigorous reviews by the International Monetary Fund -- assessments that some countries, including the United States, had long resisted. And they urged new constraints on the pay schemes at financial firms that "reward excessive short-term returns or risk-taking."

Sarkozy was especially pleased by the mention of executive compensation, though the communique noted that action could be voluntary or regulatory in nature. "Have you ever seen in the Anglo-Saxon world even discussion to have rating agencies downgrade the banks where executive compensation has [encouraged] them to take too much risk? I have never seen it," he said.

Senior Bush administration officials played down Sarkozy's comments, arguing that the agreement yesterday did not signify a "pro-regulatory" shift by the administration but rather an acknowledgement that the regulatory system needed to be updated. They spoke on condition of anonymity under ground rules set by the White House.

Obama stayed away from the summit, though the White House extensively briefed one of his senior advisers on the deliberations and two of the president-elect's representatives met with 17 leaders or their top aides on the sidelines. Many sections in the communique may please Obama, but at least one pledge to which Bush agreed -- a 12-month hiatus on protectionist measures -- could be viewed as limiting his options.

Many leaders frown on Obama's calls to bail out the auto industry as a form of protectionism. The section of the communique on the issue of protectionism prompted fierce debate, with discussions dragging on until 11 p.m. Friday, in a pitched battle between France and the United States, diplomats said.

Sarkozy, diplomats present at the summit said, was the slowest to commit to a moratorium on protectionist measures and a reaffirmation of free trade, flustering some of the developing world leaders whose nations have been badly hit by a drop-off in exports as the global economy slows. Sources said other leaders, including Canadian Prime Minister Stephen Harper, spoke out against Sarkozy's calls for broad global regulation, arguing that even in progressive Canada, the idea would be seen as violating national sovereignty.

"Here you had everyone at the table trying to come together, and Sarkozy was out there trying to write the world according to Sarkozy," said a senior diplomat present at the summit. "It was not helpful."

Obama, in the Democratic Party's weekly radio address, commended Bush yesterday for holding the summit and also called for a new fiscal stimulus package -- which Bush has resisted. On that issue, the communique leaned toward Obama's position, calling for "using fiscal measures to stimulate domestic demand to rapid effect, as appropriate."

"Whereas five or six weeks ago you had coordinated central bank cuts, now it's moving to the fiscal side, and I think the U.S. can speak for its own position . . . but it is my own judgment that you will see a major fiscal expansion under the president-elect's administration," World Bank President Robert Zoellick, who attended the summit, said in an interview.

Dominique Strauss-Kahn, managing director of the IMF, who also attended, called for nations to approve a fiscal stimulus equal to 2 percent of gross domestic product. Such a move, he said, would result in a 2 percent increase in growth. When asked where fiscal stimulus was need, he said, "everywhere, everywhere where it is possible."

During the talks, developing countries demanded a greater role in elite financial institutions, and the conference's communique called for the immediate expansion of the Financial Stability Forum to a "broader membership of emerging economies."

The Swiss-based organization brings together finance ministry officials and central bankers, but while it includes Singapore and Hong Kong, China is not yet a member. In what one diplomat said was a contentious debate, Brazil and China demanded that they should be represented on the FSF.

The communique also said that, over time, the IMF and other global institutions "must be comprehensively reformed so that they can more adequately reflect changing economic weights in the world economy."

Traditionally, global economic shocks would be handled by the Group of Seven -- the United States, Britain, France, Germany, Japan, Canada, Italy -- or the G-7 and Russia, known as the G-8. The G-20 folds the G-8 into a larger group that includes emerging economies -- China, Brazil, Saudi Arabia, Indonesia and South Africa among them.

"We are talking about the G-20 because the G-8 doesn't have anymore reason to exist. In other words, the emerging economies have to be taken into consideration in today's globalized world," Brazilian President Luiz Inácio Lula da Silva said as he headed to the session.

At the meeting, Chinese President Hu Jintao called for "a new international financial order that is fair, just, inclusive and orderly," according to a translation of his remarks. Hu, however, did not address demands from Western countries that China use some of its $2 trillion in reserves to bolster the IMF.

In an interview, British Chancellor Alistair Darling said that it is not appropriate now to talk about changes in the power structure of the IMF, including possible adjustments to voting, or quota, rights. He said that it is most important that countries with surpluses contribute as much as they can. "I think people should be less concerned at the moment about quota and therefore voice than actually making sure the IMF's got money in the till," he said. "What I'd say to them is, I understand that, but there's a bigger prize here."

The communique minced no words in outlining the causes of the crisis, blaming "weak underwriting standards, unsound risk-management practices, increasingly complex and opaque financial products and consequent excessive leverage." While many nations have blamed the United States for failing to monitor excesses in the securities markets, the communique diplomatically did not.

A British official, speaking on condition of anonymity because he was not authorized to speak publicly, said U.S officials privately acknowledged their role in the crisis. "The U.S. threw up their hands and said that our subprime mortgage industry left a lot to be desired," the official said. "But there was determination not to have any finger-pointing."

No decision has been made on where the next summit will be held. Sarkozy publicly recommended London because Britain will chair the G-20 in 2009.

Staff writers David Cho and Amit Paley contributed to this report.

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With his 65th birthday -- the age of Medicare eligibility -- fast approaching, Bill Sturm is discovering the downside of this federal health-insurance program: its wide array of choices.

"Even after spending hours researching the options for a retirement-issues group I lead, I still find it really complicated and frustrating," says Mr. Sturm, a lawyer who is winding down his Lexington, Ky., law practice.

Today marks the start of Medicare's six-week annual election period. That's when individuals already in the program can add, drop or switch prescription-drug plans and make a wide range of other changes to their coverage.

In Medicare, individuals must choose one of two paths: the original fee-for-service Medicare plan, or a federally subsidized Medicare Advantage plan, which typically operates like a health-maintenance or preferred-provider organization. Many who opt for traditional Medicare also purchase a "Medigap" policy, as well as a separate prescription-drug policy, to patch holes in their coverage. Those new to the program face the same choices upon qualifying, an event that, for most, occurs upon turning 65.

As simple as this decision might sound, it means weighing dozens of options. While some plans simply charge a monthly premium, others impose a range of fees, including co-payments and deductibles. As a result, it's not always easy to project what your out-of-pocket costs will be. With Medicare Advantage for instance, your costs will depend on the services you use. Is it better to buy a $70-a-month plan that fully covers hospitalization or a zero-premium plan that charges $150 a day for hospital stays?

"It's like comparing apples to oranges to kiwis," says Judith Stein, executive director of the Center for Medicare Advocacy, based in Mansfield, Conn.

It's no wonder that many people -- when they reach age 65, or when jumping between plans during the annual election period -- simply opt for the coverage with the lowest premium. But there are smarter ways to shop. Here are some issues to consider:

ORIGINAL MEDICARE AND MEDIGAP

About three-quarters of Medicare's 44 million beneficiaries are enrolled in what is now known as "original" Medicare. (As opposed to Medicare Advantage, with about 9.4 million beneficiaries.) Original Medicare consists of Part A, which covers services including hospitalization, and Part B, which pays for doctor visits and other types of outpatient care. There's no charge for Part A, as long as you or a spouse has paid into Medicare, via a payroll deduction, for 10 or more years. The premium for Part B, currently $96.40 a month, will remain at that level in 2009. The figure is higher for singles earning more than $85,000 a year in 2009 and couples with incomes above $170,000.

Like most health-insurance plans, Medicare doesn't pick up the tab for everything. Patients are required to pay a portion of some of their bills, via deductibles and other cost-sharing arrangements. That's where Medigap (officially known as Medicare Supplement Insurance) comes in.

Such policies, sold by private insurers, help plug the holes in original Medicare. These standardized plans -- labeled "A" through "L" -- each offer a different set of basic and extra benefits. The more benefits, the higher the premium. With Plan F, for instance, you can be virtually assured that in return for a relatively high monthly premium, you'll never have to pay a dime for the services Medicare covers (except for prescription drugs). A 65-year-old woman would pay $103 to $358 a month for Plan F, depending in part on where she lives.

In a sense, shopping for a Medigap policy is easy. Because the federal government requires insurers to offer a standardized menu of benefits, all you have to do is figure out which package you prefer -- and look for the insurer that charges the lowest premiums. That said, in some situations it may make sense to go with a slightly higher-cost alternative.

For example, some insurers attempt to "buy premium" -- by enticing people with bargain rates only to raise premiums above the competition in later years, says Paul Precht, director for Policy and Communications of the nonprofit Medicare Rights Center. While you can always try to switch out of a plan that imposes a big rate hike, because of the way Medigap plans work, there may be no guarantee that another plan will take you.

To try to get a sense of where a plan's premiums might be headed, Bonnie Burns, training and policy specialist for California Health Advocates, a nonprofit education and advocacy organization, recommends asking a company for its past record of rate increases. Be wary of small players because "one large claim could affect their prices dramatically," she says.

Another way to anticipate rate increases is to find out how the company calculates its premiums. There are three different methods, although some states only permit the use of one or two. Those close to 65 may be able to find a cheaper deal with a plan that uses an "attained age" formula. Here, you'll pay less if you sign up at 65, versus age 75. But the insurer is free to increase your premium every year -- both to keep up with rising health-care costs and to reflect the risks associated with advancing age. As a result, "prices can go up more quickly with these plans," says Ms. Burns.

In contrast, those in a "community rated" plan may see their rates rise more slowly over time. Under these plans everyone, regardless of age, pays the same premium. Those who sign on at 65 may pay slightly more than they would under an attained-age plan. But as they age, they're likely to pay slightly less. "Community rating is an advantage the older you are because the rating is subsidized across all the age groups," Ms. Burns says. "Rates tend to be more stable over time because of that cross-fertilization."

For the most part, the premiums on a Medigap policy will be more expensive than those for a Medicare Advantage plan. And since Medigap policies today don't cover prescription drugs, you will probably want to purchase Medicare Part D prescription-drug coverage, which introduces a new set of choices. (We looked at Medicare drug coverage in the October issue of Encore.)

Those who sign on with Medigap within six months of enrolling in Medicare -- or who lose their previous coverage for reasons including employer cutbacks -- can't be denied a Medigap policy or be charged more if in poor health. Otherwise, with a few exceptions, once the six-month window is closed, you may be forced to pay a higher premium or, in extreme cases, even be denied coverage.

MEDICARE ADVANTAGE

Previously known during the late 1990s as "Medicare+Choice," Medicare Advantage gives you the option of receiving Medicare benefits through a private health plan. Overall, such plans, when compared with a Medigap policy, generally cover a wider array of benefits that often include prescription drugs and dental care. But while most of these plans charge lower premiums -- some go as low as zero -- they can also expose participants to risks they wouldn't generally face with Medigap.

For example, some substantially change their benefits or fees from year to year. Typically structured as managed-care plans, some also restrict where policyholders can seek care. Moreover, because these plans routinely require patients to pay deductibles, co-payments and the like, some fail to fully protect policyholders from high medical bills. In extreme cases, several studies have found that patients with serious health problems can wind up paying more out of pocket with certain Medicare Advantage plans than they would with Medicare alone.

"Some plans have extremely high out-of-pocket costs if you're a big user of health care," says Stuart Guterman, assistant vice president at the Commonwealth Fund, a private foundation that does research on the health-care system and published one of those reports.

Comparing Medicare Advantage plans isn't easy. They have to cover the same services as Medicare. (If you join a Medicare Advantage plan, you are still considered to be in Medicare.) But while they are required to keep overall costs at or below the average for Medicare, each plan is allowed flexibility to structure its benefits and cost-sharing arrangements. As a result, these plans can require patients to pay a greater or smaller share of the expense for individual services than they would under original Medicare.

When shopping for a plan, the first step is to look for those that include your doctors. While virtually all these plans provide managed care, the degree to which they permit the use of doctors and hospitals outside their networks varies. Typically, HMOs offer less flexibility than PPOs and the fast-growing private fee-for-service plans that allow policyholders to see any provider willing to accept the prices they pay.

The next step is to compare prices. But don't simply examine premiums. Calculators available at www.medicare.gov will estimate how much you're likely to spend on premiums, co-payments, deductibles, and the rest for plans in your area.

Once you've narrowed your options, check the fine print. To guard against unexpected medical bills, look at how much you'd have to contribute toward services such as hospital stays and skilled nursing care.

Chris Merrill, an independent insurance agent in Salt Lake City, won't enroll his clients in a plan unless it caps their potential annual expenditures. Half of all Medicare Advantage beneficiaries are in plans with such spending caps. But in the fine print, some exempt certain charges, such as chemotherapy and other drugs covered under Medicare Part B, says Mr. Precht of the Medicare Rights Center. For this information, you may have to look beyond the summary of benefits many consumers rely upon and dig instead into the detailed disclosure documents.

Because Medicare Advantage plans can change frequently, you'll need to re-examine your options every year. These plans can't generally deny you coverage (unless you have kidney failure) or charge you more if you have health problems. But if you pick a plan you aren't satisfied with, you may have to wait several months for the next enrollment period -- from Nov. 15 to March 31 -- to switch into a new one.

—Ms. Tergesen is a staff reporter in The Wall Street Journal's New York bureau. She can be reached at encore@wsj.com.

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WASHINGTON — With 20 world leaders in town for 24 hours, there wasn’t much time for grand gestures or bold promises at Saturday’s summit meeting on the global financial crisis. But that did not stop the leaders from bringing 20 different agendas, some more ambitious than others.

There was the French president, Nicolas Sarkozy, without his glamorous wife, Carla, but with a raft of proposals to “change the rules of the game,” as he said last week after a meeting of European leaders.

There was Hu Jintao, the president of China, heading a delegation of 100 people and wielding a fat checkbook — nearly $2 trillion in foreign exchange reserves — that Beijing could lend to distressed countries.

There was Prime Minister Gordon Brown of Britain, emboldened by his much-praised response to the banking crisis at home, and fresh from criticizing the proposed bailout of American carmakers in a speech in New York on Friday.

And finally, there was President Bush, the reluctant host in his waning months in office. “The crisis was not a failure of the free-market system,” Mr. Bush said in his weekly radio address on Saturday, trying to dial back expectations. “The answer is not to try to reinvent that system.”

How world leaders approached the Summit on Financial Markets and the World Economy — as Mr. Bush called the meeting — had a lot to do with how the financial crisis affected their political fortunes.

For Mr. Bush, the upheaval delivered a final blow to an administration staggering under an unpopular war in Iraq and a weakening economy. With President-elect Barack Obama watching from Chicago, Mr. Bush was not even the most sought-after American at the meeting he organized, a meeting that was the idea of Mr. Sarkozy’s. Instead, leaders from Mexico to Turkey lined up to meet two emissaries sent by Mr. Obama.

Mr. Sarkozy, on the other hand, only became president of France last year, after the seeds of the crisis had been planted. His call for greater regulation plays into France’s historical preferences for a robust state role in the market, making Mr. Sarkozy an ideal point man for the effort.

“Sarkozy is in a very strong position of not owning the crisis, as other leaders do,” said Kenneth S. Rogoff, a professor of economics at Harvard. “Like Obama, he can take a more detached view.”

The French leader’s high profile was not without risks. “This was his idea,” said Simon Johnson, a former chief economist of the International Monetary Fund.

Besides Mr. Sarkozy and Mr. Bush were the leaders from Argentina, Australia, Brazil, Britain, Canada, China, Germany, India, Indonesia, Italy, Japan, Mexico, Russia, Saudi Arabia, South Africa, South Korea, Spain, and Turkey.

Angela Merkel, the German chancellor, and President Cristina Fernández de Kirchner of Argentina were the only two women in the Group of 20 meeting — and neither, analysts said, brought a very strong hand.

The German economy just slipped into recession, and its government was slow to accept the need to recapitalize its banks, which purchased a lot of toxic mortgage-related assets from the United States.

Argentina, meanwhile, announced it would nationalize $26 billion of private pension funds, raising fears that the government was short on cash and putting Mrs. Kirchner into an economic dog house with foreign investors, who are pulling their money out of the country.

The Russian president, Dmitri A. Medvedev, also came with arguably reduced influence, partly for economic reasons: as the price of oil has plummeted, so has Russia’s economy, its foreign exchange reserves and perhaps some of its political muscle.

None of this has stopped Mr. Medvedev from striking a combative tone toward the United States.

“They let this currency bubble grow in the interests of stimulating domestic growth,” he declared in a recent speech. “They did not listen to the numerous warnings from their partners, including from us. As a result they have caused damage to themselves and to others.”

For Mr. Brown of Britain, the crisis has been a mixed bag. As chancellor of the Exchequer under Tony Blair, Mr. Brown is identified with the economic policies that gave Britain years of growth but brought some of the same excesses as in the United States.

However, by moving quickly to recapitalize the British banking system, Mr. Brown appeared decisive and won praise from economists. He also stopped, at least for now, a stream of political obituaries suggesting he would soon be ousted by the Tory leader, David Cameron.

On Friday, Mr. Brown was introduced at a breakfast at the Council on Foreign Relations in New York by Robert E. Rubin, the former Treasury secretary, with lavish praise for his role during the crisis.

“Not only the U.K. but the entire world has been very fortunate to have you as a leader,” Mr. Rubin said.

Mr. Brown, smiling broadly, responded that he was “pleased to say that a large number of governments around the world have recognized” that injecting capital into banks is the best way to restore stability.

The prime minister felt confident enough to offer the United States some unsolicited advice, obliquely criticizing proposals supported by Mr. Obama to bail out the Big Three automakers.

Without referring to the companies by name, he warned against calls to save jobs in industries that were facing an irreversible decline in the face of global competition. The right response, he said, would be to say, “We can’t help you keep your old job, but we can help prepare you for your next job.”

To help countries hurt by the crisis, Mr. Brown is pushing for the resources of the International Monetary Fund to be expanded. The fund, he said, should function like an “international central bank.”

The trouble with this idea is that there are only a handful of candidates with enough cash to pour money into the I.M.F. — China, Japan, and oil producers like Saudi Arabia. The Japanese prime minister, Taro Aso, pledged up to $100 billion in additional lending to the fund.

To persuade these countries to increase their contributions would require giving them a larger role in the governance of the fund. And that would mean reducing the influence of Britain and other European countries.

China staked its claim to a significant role in another way: It announced a $586 billion stimulus package a week ago, allowing President Hu to seize the initiative on economic policy.

For leaders of emerging-market countries who have been clamoring for a seat at the summit meeting table, even being here was something of a victory. For the president of Brazil, Luiz Inácio Lula da Silva, it was partly a simple matter of protocol: Brazil currently leads the Group of 20, which gave Mr. da Silva some say over the agenda.

Beyond that, he has been outspoken about how developing countries are victims of a crisis not of their own making.

“No country is safe,” Mr. da Silva said last weekend, opening a preparatory meeting of finance ministers in São Paulo. “They are all being infected by problems that originated in the advanced countries.”

Pakistan Agrees to I.M.F. Loan

KARACHI, Pakistan (AP) — Pakistan has agreed to borrow $7.6 billion from the International Monetary Fund to try to avoid an economic crisis, an official said on Saturday.

The official, Shaukat Tareen, Pakistan’s finance chief, said the I.M.F. had agreed “in principle” to the bailout after vetting government plans to tackle Pakistan’s budget and trade deficits.

The loan will shore up Pakistan’s foreign currency reserves and help alleviate the prospect of a run on the rupee and a default on international debt.

Steven Lee Myers contributed reporting from Washington, and John F. Burns from New York.

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