The Irish Independent reports that Taoiseach Brian Cowen last night warned that we face a 'painful' five-year recovery from the financial crisis.

In his starkest outline to date of the scale of the problems, Mr Cowen prepared the country for a swingeing Budget tomorrow week.

He also took the unusual step of calling a media briefing after a six-hour cabinet meeting at which he said the challenge was"huge, urgent, and is not going to go away".

He added: "The Budget will be difficult."

Living standards will decline and there will be a considerable contraction in the economy this year, he warned.

As he prepared for tax increases and savage spending cuts next week, he said: "We are going to have to take a drop in our standard of living of at least 10pc. We have to take a few steps back."

And he made it clear the pain would continue long after the April 7 Budget.

"This is a process of adjustment that must go on for a number of years. We are trying to survive this very painful recession," he said.

The Taoiseach hinted that more of the lower-paid would have to be taxed for the first time.

He said that many had been taken out of the tax net in recent years, but this trend was set to be reversed.

"The severity of this recession means we have to re-orient our tax system. That will involve broadening the base."

Mr Cowen repeatedly emphasised the scale of the crisis and the fact that the Government would have to address it over a number of years.

He emphasised that we were taking a severe hit because we were among the small, open economies of the world.

"We are trying to solve this problem over a number of years," he said."There is agreement with the European Union on a five- to seven-year cycle."

The Government has identified a 'structural deficit' of 8pc of GDP, or somewhere up to €16bn, that would have to be closed and eliminated.

The Budget will be a combination of tax rises and cuts in spending on both the current and capital side, Mr Cowen said.

And our taxation model was"going to have to adjust to the new situation".

Asked about the public demand for equity, particularly on tax exiles, Mr Cowen said:"We are trying to be fair in all the circumstances."

He added:"That is about the ability of people to contribute in a way that is consistent with their ability to pay."

The Taoiseach said ministers had to be careful that they did not "strangle" the economy by acting too quickly.

"The challenge is huge, urgent, and is not going to go away. The Budget will be difficult. Everything is on the table.

"There are very difficult choices to be made. But the Government will be doing what is required over a prolonged period of time."

Mr Cowen's briefing, in the Sycamore Room of Government Buildings, revealed that An Bord Snip has looked at eight government departments so far in an attempt to cut spending.

Difficult

It also emerged that the March Exchequer figures were shaping up to be as difficult as the huge losses sustained in January and February.

In terms of income, Mr Cowen said that national accounts were getting back to levels last seen in 2002 or 2003. But spending had increased dramatically over the past six years.

"That is a stark comparison. It's my effort to convey the magnitude of the problem."

But he pledged that the Government would show the international markets its determination to meet the challenge. He said he had been heartened by the calm and deliberate approach of his fellow members of Cabinet in seeking the right mix of measures.

He regretted that people were losing their jobs for the first time.

"Do I take my share of responsibility? Of course I do."

Mr Cowen, who will chair another cabinet meeting dedicated to the Budget today, said he was not tempted to seek an electoral mandate based on its provisions.

"The electoral mandate we work off is 2007. I don't think this country needs or wants a general election."

Any other Government would have to face the same challenges, he said.

The Irish Independent also reports that the domestic banks are bracing themselves for hard talks with the Government over valuations of property development loans as Finance Minister Brian Lenihan presses ahead with the setting up of a State-backed vehicle to absorb these troubled assets.

Department of Finance officials broached the subject with the main lenders late last week. They are expected to ramp up discussions on the creation of an asset management company (AMC) ahead of next week's emergency Budget.

Industry sources do not expect a fully-fledged package to be agreed by the Budget, but that the minister would use the occasion to unveil a "roadmap" towards setting up a vehicle.

"As was the case with the UK toxic assets insurance scheme, it will take some time from when a solution is announced and when the banks conclude negotiations and sign up to a deal," one industry source revealed.

The idea of an AMC was proposed recently by economist Peter Bacon, who was brought in to weigh up the Government's options in a bid to free up banks to provide credit to the recessionary economy.

The agency been described alternatively as a 'bad bank' or 'toxic debt company'.

Soured

However, Mr Lenihan took exception of the use of the words 'toxic bank' in the Dail last week, saying that"no such proposal is being considered by the Government".

The banks will be expected to write down existing bad debts before transferring the assets to an AMC, which will most likely be run by the National Treasury Management Agency.

Soured loans to the property and construction sector make up the bulk of the €26.9bn that JP Morgan expects the main banks to write off over the coming years.

The US brokerage's estimates are higher than the banks' own worst-case scenarios, but could form a basis for the type of write-downs the Government will expect.

Mr Bacon has proposed that the AMC issue the banks with Government-backed bonds as payment, which would carry a lower value to assets that the lenders are transferring.

It was also reported yesterday that the State-run vehicle would eventually sell the written-down bank property assets on the open market.

A number of international private equity houses have already expressed interest to the NTMA and the Government's banking adviser, Merrill Lynch, in acquiring such assets. It was suggested that, ultimately, individuals could join auctions for the assets, which could go some way towards reigniting the moribund property market.

The Irish Times reports that the national electricity grid’s operator has given the contract for a €600 million power line linking Ireland and Britain to Swedish company ABB.

Eirgrid, which manages the national system for transmitting and distributing electricity, is investing €600 million in an interconnector that will run between the east coast and Wales. The EU is contributing €110 million.

Yesterday, the agency said that it has awarded the contract to design, manufacture and instal the cable to ABB Systems, one of five players who competed for the deal last year.

ABB manufactures cables, switches and most equipment needed by electricity transmission systems. It also designs and builds the systems themselves.

Last year it had revenues of €34.9 billion and net income of €3.1 billion. The company has its roots in both Switzerland and Sweden and has been doing business since the mid-19th century.

The project attracted bids from leading European players, the German giant Siemens, French groups Nexan and Areva, and Italian operator Prysmian.

The interconnector will link Deeside in north Wales and Woodland in Co Meath, where Eirgrid operates a substation. It will come ashore close to Rush, Co Dublin. Construction will create about 100 jobs.

It will allow power to flow both ways so electricity can be imported from Britain and exported there. It will have the capacity to carry 500 megawatts of electricity, equivalent to a medium-sized generating station, and is due for completion in 2012.

Commenting on the news yesterday, ABB’s head of power systems, Peter Leupp, said that the company’s “technology will enhance the stability of both the Irish and UK transmission grids, and also expand capacity for the use of renewable power”.

Eirgrid chief executive Dermot Byrne said that the interconnector is vital for Ireland.

“It will help to ensure that Ireland has enough electricity to meet our needs into the future in a sustainable manner. Importantly, the interconnector will also support the energy sector in adapting to meet the challenges posed by climate change and fuel security,”he added.

Minister for Energy Eamon Ryan said that the competition which the interconnector will bring and “the increased support for renewables will reduce our electricity bills in the long term”.

The Irish Times also reports that business and civic leaders will put forward their proposals to tackle the impact of the recession at a conference later this week.

The Irish Management Institute is holding a national leadership forum on April 3rd, four days ahead of the emergency budget, at its conference centre in Sandyford, Co Dublin.

The institute said yesterday that the forum, its annual conference, will give business, political and civic leaders an opportunity to outline the measures they think are needed to get the country and its businesses back on track.

Taoiseach Brian Cowen will address the forum. Other contributors will include Vodafone chief executive, Charles Butterworth, Prof Ciarán O’Boyle of the Royal College of Surgeons, competitiveness council chairman, Don Thornhill and Dr Phil Nolan, chairman of the institute and former chief executive of Eircom.

“The objective of the day is to tease out practical ways of managing through the current recessionary period and to find a new equilibrium for the Irish economy in the medium to longer term,” the institute said yesterday.

Leading organisations through a crisis period will be a key theme for audience discussion, it added.

The institute’s chief executive, Dr Tom McCarthy, said it would act as a “think tank” for the whole country.

“The objective of the national leadership forum is to bring the best management brains in the country together in one place.

“This one-day intensive think-in will produce a series of practical measures and recommendations outlining the way forward,” he said.

The Irish Examiner reports that a reduction in electricity prices and a significantly lowered VAT rate are needed in next week’s budget, in order for the country to regain competitiveness, according to Dublin Chamber of Commerce.

In its pre-Budget submission to Government, the Chamber has called for a lowering of the VAT rate from 13.5% to 10% in order to boost flagging consumer confidence.

It is also seeking the introduction of a property tax for local authorities and the abolition of upward only commercial rent reviews.

It has also followed the lead of the Small Firms Association (SFA) in calling for Government departments and agencies to pay their bills on time.

"There are several measures that the Government can introduce to cut business costs through regulation and legislation — which would not cost the exchequer.

"By reducing electricity prices and abolishing upward-only rent reviews, Irish businesses can become more competitive," said Dublin Chamber chief executive, Gina Quinn.

"Despite recently announced cuts in the price of electricity, businesses are still paying 8% above the EU average rate. This is undermining their ability to compete internationally during the global recession," she added.

The Chamber added that the upward-only rent review policy is only present in a small minority of EU countries and was making it "impossible" for some Irish companies to keep rental costs in line with their other costs.

Said Ms Quinn: "There is a difficult balancing act required in the budget so that the cutbacks and tax increases don’t exacerbate the situation by further contracting the economy."

The Chamber also wants to see further benchmarking of public sector wages to reflect the wage cuts and job losses prevalent throughout the private sector.

The Financial Times reports that leaders of the world’s 20 leading and emerging economies meeting in London this week are set to reiterate a pledge to avoid protectionism and complete stalled global trade talks but offer little to those calling for more economic stimulus.

A 24-point draft of the G20 meeting’s final communiqué, obtained by the Financial Times, does not contain specific plans for a fiscal stimulus package, which had been resisted by European countries. It claims that the fiscal expansion already in process will increase global output by more than 2 percentage points and create more than 20m jobs.

Combined with increased resources for a reformed International Monetary Fund, the fiscal and banking support actions aim to enable the world economy to expand by the end of 2010. The draft left a blank space where a target for economic expansion could be inserted.

An official source said the text was unlikely to change substantially ahead of the April 2 summit, although there is still debate over certain figures.

Stating that a “global crisis requires a global solution”, the G20 leaders pledge:“We are determined to restore growth now, resist protectionism, and reform our markets and institutions for the future . . . We are determined to ensure that this crisis is not repeated.”

A second official source confirmed it was the latest G20 draft, but cautioned that it was still open to changes during more than two days of negotiations in London from today.

Describing it as a “UK Treasury trial balloon” he said some points were open to negotiation, including co-operation, stimulus packages and, above all, what he called problematic reforms of the IMF. China and Brazil might introduce changes, the source added.

Avoiding direct mention of capitalism, the leaders state their fundamental belief in “an open world economy based on market principles, effective regulation, and strong global institutions” to ensure“a sustainable globalisation with rising prosperity for all”.

Responding to inflationary warnings made by Germany and other countries, the G20 also say they are committed “to put in place exit strategies from the necessary expansionary policies, working together to avoid unintended impacts on others”.

The communiqué touches on other well-trodden themes from the previous G20 meeting, but breaks little new ground.

Concern for the stability of emerging economies is a ­central theme in the document. The summit agrees to increase resources available to the IMF, borrowing through the market if necessary. This would probably involve the use of the IMF’s own currency special drawing rights, a move for which China has pushed. A substantial increase in lending by multilateral development banks is agreed, including funding from export credit and investment agencies.

On currencies, G20 nations pledge to refrain from“competitive devaluation”.

Hedge funds will come under oversight of a stronger Financial Stability Forum, which has expanded to include all G20 members and been renamed the Financial Stability Board.

Non-co-operative tax havens will be put under unspecified sanctions and named in a document to be published at the summit.

Executive pay and bonuses should “reward actual performance, support sustainable growth and avoid excessive risk-taking”, according to principles already laid out by the FSF.

Responding to accusations of rising protectionism in national stimulus packages, the leaders reaffirm the commitment made in Washington last year not t  raise new barriers to investment or trade, and not to create subsidies for exports. “We will not retreat into financial protectionism,” they say.

The FT also reports that banks operating in Britain will be banned from using tax havens if they sign up to a draft code of practice drawn up by the government to address a row over their aggressive tax planning.

The draft, which also gives the tax authorities the final say over whether they consider a deal to be avoidance, is more radical than businesses expected when it was announced by Alistair Darling last month. But its stringency will add to widespread scepticism that banks will sign up to the voluntary code, fuelling suspicions that it is primarily a political damage limitation exercise.

Some senior bankers who have seen the draft code, to be published in next month’s Budget, have been alarmed by its emphasis on paying tax in accordance with the “spirit as well as the letter of the law”, a subjective concept that would alter fundamentally the balance of power between banks and Revenue & Customs.

The code will only succeed if the government is able to persuade all banks, including UK branches of overseas banks, to sign up to it. The government believes that banks will accept the code because of public anger over avoidance at a time when taxpayers are providing support for the industry. Dave Hartnett, permanent secretary for tax at Revenue & Customs, told the Financial Times he believed banks operating in Britain would sign up to the code after a period of consultation.

The code is designed to stop companies using offshore jurisdictions such as the Cayman Islands that are viewed with suspicion by tax authorities. The ban is likely to fuel the controversy over the “tax haven” label, which has never been defined successfully.

The code is unlikely to curb the use of onshore centres such as Luxembourg, the Netherlands, Switzerland and Delaware for corporate tax planning. It will also permit the use of havens for “non-tax commercial reasons” which could justify many transactions in jurisdictions such as Jersey and the Isle of Man.

In recent weeks, corporate lawyers have fought back against the perception that the use of tax havens is inherently suspect, arguing they are valuable for their tax neutrality and for the ability to sidestep irrelevant complications in the tax code. Miles Walton, a partner of Allen & Overy, a law firm, said they “played a helpful and beneficial part in the world of international finance and investments”.

Lord Myners, City minister, told the House of Lords this week that tax avoidance was a moral issue:“We can no longer hide behind the excuse that there is no acceptable definition of avoidance.”

The code defines tax avoidance as any outcome which could “reasonably be expected to be unintended by parliament or tax authorities” in a move likely to infuriate businesses.

But the attempt to invoke the spirit of the law has shocked some legal experts. Judith Freedman, a professor of tax law at Oxford University, said: “There is a fundamental issue here about the rule of law in how we attempt to control the behaviour of taxpayers. It is whether we use legislation or whether we use the discretion of unelected officials.”

Baroness Noakes, shadow Treasury spokesman, said last week that the complexity of the tax code meant it was difficult to identify its spirit.

“I believe that taxation needs to be imposed by clear law,” she said.

The proposed code would bar any tax planning round the pay and bonuses of senior executives. Mr Hartnett said there was little current evidence of bonuses escaping tax.

The New York Times reports that the chairman and chief executive of General Motors, Rick Wagoner, resigned Sunday as part of a broad agreement with the Obama administration to funnel more government aid to the ailing auto giant, according to people close to the decision.

Mr. Wagoner, who has served as G.M.’s top executive since 2000, agreed to step down after it was requested by the president’s auto task force, these people said.

G.M. had no immediate comment on the sudden development, which came on the eve of Mr. Obama’s announcement on Monday that is to detail his rescue plans for G.M., Chrysler and the larger American auto industry.

But people in the company said G.M. would issue a statement on Mr. Wagoner after the president unveiled his plan in Washington.

“The bigger surprise is not that he resigned. That was going to happen sooner or later,” said Michael Useem, a professor of management at the Wharton School.“But the moment seems inexplicable.”

The president’s task force is expected to recommend more short-term aid for G.M. and Chrysler, but with tight strings on the money and a deadline on getting concessions from union workers and creditors.

A person with direct involvement in the auto bailout discussions said the new deadline would be April 30.

“Thirty days from now, there will either be a bankruptcy or the naming of a chief restructuring officer who will have government authority to ‘knock heads together,’”this person said of G.M. In addition, the government must come up with a backup guarantee on loan for G.M. to operate in bankruptcy because the banks will not do it.

G.M. and Chrysler have almost exhausted the $17.4 billion in federal aid the two companies have received since December. G.M. has asked for up to an additional $16.6 billion, and Chrysler has requested an additional $5 billion.

According to people close to the talks, the task force will treat G.M. and Chrysler differently with respect to their overhlaul plans and aid requests.

Chrysler has submitted a stand-alone revival plan, but has also proposed entering a global alliance with the Italian automaker Fiat.

People with knowledge of the task force’s deliberations said that members so far are looking favorably on the deal, which would give Fiat a 35 percent stake in Chrysler in exchange for providing small cars and engines to the American company.

Like Chrysler, G.M. submitted an overhaul plan in February, which called for cutting 47,000 jobs worldwide and drastically shrinking the company’s models, brands and dealers.

But people close to the auto task force said some members had considered the plan inadequate to transform G.M. into a profitable enterprise.

Mr. Obama, in comments in a televised interview on Sunday, said neither G.M. nor Chrysler had yet met the conditions of their existing loans.

“That’s going to mean a set of sacrifices from all parties involved — management, labor, shareholders, creditors, suppliers, dealers. Everybody’s going to have to come to the table and say it’s important for us to take serious restructuring steps now in order to preserve a brighter future down the road,” Mr. Obama said in a taped interview on the CBS news program“Face the Nation.”

While Mr. Obama did not specify a need to replace Mr. Wagoner at G.M., the president has repeatedly cited mistakes made by management as contributing to the industry’s troubles.

Mr. Wagoner was not available for comment, according to people at G.M. As recently as March 18 he said in an interview that he did not consider his job at stake in his discussions with the president’s auto task force. “They so far haven’t commented on that,” he said.

Administration officials stopped short of saying that Mr. Wagoner had been forced out, only that he was asked to leave and agreed, according to people with knowledge of the decision.

Frederick A. Henderson, G.M.’s president, is a leading candidate to replace Mr. Wagoner as CEO, at least temporarily. Members of the auto panel spoke with Mr. Henderson recently, and came away with a favorable impression of him, people with knowledge of the panel’s discussions said Sunday. But the task force planned to recruit an outside reorganization specialist to run the company over the long term, one person said.

Mr. Wagoner’s departure at G.M. marks an end to a corporate hierarchy that spanned generations. The only previous G.M. chairman to leave under duress was Robert C. Stempel, who was force to resign in 1992.

Mr. Wagoner, a graduate of Duke University and the Harvard Business School, vaulted into Detroit’s consciousness in 1992, when he was named G.M.’s chief financial officer at the age of 38.

He was a protégé of G.M.’s former chief executive, John F. Smith Jr., who ran the company after Robert C. Stempel resigned in October 1992. Mr. Wagoner stepped in when G.M.’s purchasing chief, Ignacio Lopez de Arriortua, left for Volkswagen in 1993.

A year later, Mr. Wagoner was named president of G.M.’s North American operations, and was elevated to president of the company and its chief operating officer in 1998. He succeeded Mr. Smith as chief executive in 2000, and became G.M.’s chairman in 2003.

Mr. Wagoner followed Mr. Smith in expanding G.M.’s operations outside the United States. In 2007, G.M. sold more vehicles outside North American than it did in its core market, in part because of Mr. Wagoner’s aggressive pursuit of sales in China, Latin America and Eastern Europe.

But G.M.’s share of its most important market, the United States, declined steadily under Mr. Wagoner. In 1994, when he took charge of North America, G.M. held 33.2 percent of the American market. Last month, G.M. held only 18.8 percent of American auto sales, according to statistics from Motorintelligence.com, which specializes in industry data. Auto sales in February were the worst for the industry since 1981.

Shortly after taking the chief executive’s job, Mr. Wagoner predicted that G.M. could earn as much as $10 a share by the middle of the decade, because of efforts the company expected to take to cut its costs, transform its operations and build its business.

Last year, Mr. Wagoner led the celebration for G.M.’s 100th birthday, promising to steer the automaker into its next century with new technology and a renewed vigor. But G.M. collapsed last fall when new-vehicle sales in the United States plummeted to their lowest level in 25 years. G.M. lost more than $30 billion in 2008, and has been subsisting on government loans since the beginning of the year.

As G.M.’s biggest defender over the years, Mr. Wagoner has long been the target of critics including shareholders.

“He’s a victim of problems that his predecessors did not solve, but he’s also responsible for where G.M. is today,”Mr. Useem said.

The NYT also reports that barely six months ago, the International Monetary Fundemerged from years of declining relevance, hurriedly cobbling together emergency loans for countries from Iceland to Pakistan, as the first wave of the financial crisishit.

Now, with world leaders gathering this week in London to plot a response to the gravest global economic downturn since World War II, the fund is becoming a chip in a contest to reshape the postcrisis landscape.

The Obama administration has made fortifying the I.M.F. one of its primary goals for the meeting of the Group of 20, which includes leading industrial and developing countries and the European Union. But China, India and other rising powers seem to believe that the made-in-America crisis has curtailed the ability of the United States to set the agenda. They view the Western-dominated fund as a place to begin staking their claim to a greater voice in global economic affairs.

TreasurySecretary Timothy F. Geithner, who once worked at the fund, has called for its financial resources to be expanded by $500 billion, effectively tripling its lending capacity to distressed countries and cementing its status as the lender of last resort for much of the world.

Japan and the European Union have each pledged $100 billion; the United States has signaled it will contribute a similar sum, though its money will take longer to arrive because of the need for Congressional approval. China, with its mammoth foreign exchange reserves, is the next obvious donor.

Yet officials of China and other developing countries have served notice that they are reluctant to make comparable pledges without getting a greater say in the operations of the fund, which is run by a Frenchman, Dominique Strauss-Kahn, and is heavily influenced by the United States and Western Europe.

A senior Chinese leader, Wang Qishan, said Friday that Beijing was willing to kick in some money, but he called for an overhaul of the way the fund is governed. China wants its quota — which determines its financial contribution and voting power — adjusted to reflect its economic weight better.

China’s contribution, Mr. Wang said, should not be based on the size of its reserves but on its economic output per person, which is still modest. Some American officials now expect a pledge on the order of $50 billion from China.

“Their arms may yet be twisted, but they simply do not want to pony up based on vague promises of governance reform,” said Eswar S. Prasad, a professor of economics at Cornell University who has discussed the matter in recent days with Chinese and Indian officials.

Given the inevitability that these countries will have a growing influence, the London summit meeting, which begins Thursday, is likely to be remembered “as the last hurrah for the U.S. and Europe rescuing the world economy,” said Simon Johnson, a professor at M.I.T. and a former chief economist of the fund.

One reason the I.M.F. has emerged as such a popular cause is that the United States has been unable to rally countries behind its other major priority: economic stimulus. The European Union opposes further stimulus packages in 2010, arguing that its social safety net makes an increase in government spending unnecessary.

European and American officials are also still divided, to a lesser degree, on how to rewrite international financial regulations. France and Germany are more receptive than the United States to giving regulators supranational authority to scrutinize global banks and other financial companies.

“The United States is desperately trying to assert leadership, as if it were 10 years ago, when the U.S. set the agenda,”said Kenneth S. Rogoff, an economist at Harvard and another former chief economist of the fund.

With more countries slipping into crisis by the week, there is general agreement that the fund needs additional resources. Since last year, the I.M.F. has made nearly $50 billion in loans to 13 countries. It is streamlining the process for making loans and loosening its strings, hoping to counter the resentment that built up against it during past crises because of its stringent demands.

At a preparatory meeting two weeks ago, finance ministers of the Group of 20 agreed to “very substantially” increase financing, though the Europeans favored an extra $250 billion, not $500 billion.

Whatever their reservations about financing, the Chinese have seized on the fund for another purpose: to tweak the United States. The governor of China’s central bank, Zhou Xiaochuan, recently proposed that the American dollar be phased out as the world’s default reserve currency. As a replacement, he suggested using special drawing rights, or S.D.R.’s, the synthetic currency created by the fund that is used for transactions between it and its 185 member countries.

Few economists view that idea as a realistic one, at least for years to come. But the mere assertion that the dollar’s pre-eminence is waning — a theme picked up by Russian officials as well — sends a message.

“I don’t think the Chinese or Russians really believe the S.D.R. is a viable currency,” said Mr. Prasad, the Cornell economist. “But they’re laying down a very clear marker that they’re going to be much more assertive about their role.”

Mr. Geithner took the remarks seriously enough that he publicly reaffirmed the primacy of the dollar.

The United States will address China’s status this week, when it announces details of a new high-level strategic and economic dialogue with Beijing, led by Mr. Geithner and Secretary of State Hillary Rodham Clinton, according to a senior administration official, who spoke anonymously because the information was not yet public. The announcement will come after the first meeting between President Obama and the Chinese president, Hu Jintao, in London.

The Obama administration has personal reasons to support the fund. Mr. Geithner was the I.M.F. director of policy planning from 2001 to 2003, after his first stint in the Treasury Department. He recruited Edwin M. Truman, another former Treasury official and a longtime advocate of the fund, as a temporary adviser to develop policies for the Group of 20 meeting.

Just before leaving his academic position at the Peterson Institute for International Economics, Mr. Truman proposed that the fund issue $250 billion in S.D.R.’s on a one-time basis to be allocated to all its members, as another way of increasing its resources. Western European countries, he said, could use their S.D.R.’s to lend money to their troubled Eastern neighbors.

That proposal is in a current draft of the statement to be issued at the Group of 20 meeting. If all the American proposals for the fund are adopted, its resources will approach $1 trillion — a big number, even in these extraordinary times.

Yet for Mr. Johnson of M.I.T., it merely shows how difficult it is for the United States to marshal support for anything else.

“They can’t agree on fiscal policy; they can’t agree on regulations,” he said.“The only thing left is the I.M.F.”