Still struggling to light a fire under the U.S. economy, President Obama will spend his day addressing the far worse European economy as world leaders complete a G-20 summit in Mexico.
The good news, if there is any, is that European leaders know they must do something fast to reverse what U.S. Treasury Under Secretary Lael Brainard called "the deterioration in economic conditions."
Obama hopes to meet individually or together with the European leaders who are at the G-20 summit from Great Britain, France, Italy and Germany. He did meet Monday with German Chancellor Angela Merkel but was forced to postpone a group meeting Monday night when the G-20 working dinner ran late.
The president has described the continuing problems facing the 17-nation euro zone and the 27-nation European Union as the most serious "headwinds" facing the U.S. economy as it labors to get back to creating hundreds of thousands of jobs a month and getting unemployment below 8%. Those are critical numbers for Obama's chances of re-election, as well.
Brainard, Treasury Secretary Timothy Geithner's top deputy for international economics, laid out the challenges Monday:
The G20 leaders are arriving here at a time when the risks are great. I think we are seeing a clear-eyed perception on the part of all the leaders that have started to have conversations bilaterally, certainly in the negotiating room, about the risks of the global economy. And I think you'll see coming out of these meetings a high degree of resolve to work together to address financial market tensions and more clarity about the need to strengthen demand.
There is in all the discussions so far a broad recognition that Europe presents the greatest challenge. The timing of the summit is opportune for President Obama to spend focused time with leaders of the largest euro area member states, both in the room and bilaterally and at this evening's discussions, as they prepare for the next stage of their response. We don't expect decisions until all euro area leaders have their summit at the end of June, but we do expect to see a clear direction of travel coming out of Los Cabos.
That "clear direction" should come in the final communique issued at the conclusion of the G-20 summit today. It's expected to call for an increased emphasis on growth in Europe, a resolution to the debt crisis in Greece, a stronger financial union among the continent's banks and sufficient borrowing capacity for other teetering economies, such as Spain and Italy.
"I think we'll see both in terms of the leaders' statements but also the actual communique language, that when they are talking about taking all-necessary measures to preserve the integrity and stability of the euro area to break the link between sovereigns and banks, these are language commitments that you'll see I think in the communique, and you'll see them putting flesh on the bones in the weeks ahead -- again, focused on those same priorities that we think are extraordinarily important to chart a path forward for a more resilient euro area," Brainard said.