Europe crisis leaves French G20 targets

Finance ministers, bankers to attempt rescue of global economy.French President Nicolas Sarkozy promised an "ambitious and humble" year as leader of the Group of 20 rich and developing economies, and he has a lot to be humble about.Despite a warning earlier this year from Christine Lagarde — then his finance minister, now IMF chief — that a failure to address global imbalances would "lead us straight into the wall of another debt crisis," that is exactly where the G20 has wound up.Now the finance ministers and central bankers gathering for two days of talks here beginning today must explain how they let the global economy run straight towards the edge of a clearly marked cliff — and what they can still do to stop it from falling over it.It was only last February, when the mandarins of finance last met in Paris, that US Treasury Secretary Timothy Geithner said "The global economy — by almost every measure — is in the best shape it's been in at any time in the last two or three years.""I think there is justifiable, growing confidence," he said.Finance officials from Brazil, India, Saudi Arabia and elsewhere will now be treated to the spectacle of their European counterparts promising to do "whatever it takes" to avert a collapse of the common euro currency.European leaders have asked for more time to figure out how they'll achieve that. Sarkozy and German Chancellor Angela Merkel now say such a plan will be ready before the G20 leaders' summit in Cannes in early November, possibly by the time of an EU summit October 23.That will be too late to give finance ministers and central bankers meeting in Paris something substantial to announce. An official at the French Finance Ministry, speaking on condition of anonymity, in fact appeared to characterise this weekend's meeting as just prep for the EU summit.Sarkozy saw the danger of inaction last March, and pledged to avoid it. In March at a summit in Nanjing, China, he said that "now that the crisis is past" it was imperative that leaders press on with reforms or else "the world will slide inexorably back into instability and crisis."That foresight was unmatched by execution, however, and the consequences for the global economy are painful — Europe's sovereign debt crisis threatens to plunge the world back into a recession that some predict could be worse than that of 2008. Europe's banks faced mounting pressure yesterday to boost their coffers to cope with the Eurozone debt crisis amid the rising likelihood that they will have to take bigger losses on Greek debt.As Greek Prime Minister George Papandreou held talks with EU leaders in Brussels, Eurozone officials raced to finalise a response ahead of an October 23 summit to resolve a crisis threatening to spark a new global recession.The head of one major lender, Germany's Deutsche Bank, voiced reluctance to recapitalise, saying the debate was "counterproductive" and that it was up to governments to restore confidence in public finances. In Paris, the French finance ministry said banks exposed to Greek debt will probably be forced to write off more than the 21 per cent so far proposed in a July Eurozone accord on a second bailout for Athens."The discussions are on a cut of 50 per cent," a source from a European government said, adding that this was a maximum level and the figure could be lower. On another front, Slovakia was set to hold a new vote on expanding the Eurozone's rescue fund.