Government not 'cure-all' for economic woes: Bush

US President George W. Bush said on Thursday that the global economic crisis was not "a failure of the free market system" and warned against seeing government intervention as "a cure-all."

"The crisis was not a failure of the free market system. And the answer is not to try to reinvent that system," Bush said in a prepared speech to lay out his agenda at Friday and Saturday talks with world leaders in Washington.

"We must recognize that government intervention is not a cure-all," said the US president, who rejected any effort to blame a lack of US regulation for the international meltdown that began with the burst of the US housing bubble.

"Some blame the crisis on insufficient regulation of the American mortgage market. But many European countries had much more extensive regulations and still experienced problems almost identical to our own," he said.

It was unclear to whom Bush's warnings about dismantling international capitalism were addressed, and the White House would only say that the US president was restating a commitment to free trade as an engine for growth.

Bush aides have said the talks would aim to forge agreement on the underlying causes of what many call the worst crisis since the Great Depression of the 1930s and principles for a coordinated international response.

"The leaders attending this weekend's meeting agree on a clear purpose: To address the current crisis, and lay the foundation for reforms that will help prevent a similar crisis in the future," Bush said.

"We also agree that this undertaking is too large to be accomplished in a single discussion. So this summit will be the first in a series," said Bush, who hands the keys to the White House to Barack Obama on January 20.

Created in 1999, the G20 comprises major rich and developing countries, accounting for 85 percent of the world economy and about two-thirds of its population.

Its members are the United States, Germany, Japan, France, Italy, Britain and Canada, the European Union, Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey.

International Monetary Fund and World Bank officials are also expected to attend the Washington summit.

Amid calls for enhancing those international institutions' role, Bush said both must "reform" and "modernize" the way they make decisions.

"They should consider extending greater voting power to dynamic developing nations -- particularly as they increase their contributions to these institutions. They should also consider ways to streamline their executive boards, and make them more representative," he said.

Bush, who worked with the US Congress to craft a 700-billion-dollar bailout of troubled US banks, praised international cooperation thus far but warned: "This crisis did not develop overnight, and it will not be solved overnight."

"There will be more difficult days ahead. But the United States and our partners are taking the right steps to get through the crisis, and they are working," said the US president.

With many looking to blame lax US regulatory structures for the meltdown, Bush said "outdated regulatory structures and poor risk management practices" had particularly hurt large international financial institutions.

Source: EconomicTimes