Europe also begins preparation for bail out plan after US

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WASHINGTON: US President George W. Bush on Tuesday discussed the global economic meltdown with leaders of Britain, France and Italy, seeking a common strategy ahead of weekend crisis talks. Noting that finance ministers from the Group of Seven rich democracies are due to meet in Washington on Friday, Bush added: "We want to make sure that all of us move in a best coordinated way as possible." Bush spoke to British Prime Minister Gordon Brown, French President Nicolas Sarkozy, and Italian Prime Minister Silvio Berlusconi and was to reach out soon to German Chancellor Angela Merkel, said spokeswoman Dana Perino. Asked whether Bush backed Sarkozy''s called for an urgent meeting of leaders from the Group of Eight industrialized countries, Perino said "the president is open to that" but that his "immediate focus" is on the G7 meeting. The talks group finance ministers and central bank chiefs of Britain, Canada, France, Germany, Italy, Japan and the United States. Russia was also expected to take part in some capacity. The discussions came days after the US Congress passed -- and Bush signed -- emergency economic rescue legislation aimed at pumping up to 700 billion dollars to bail out troubled US banks and ease a credit squeeze. The move, which won warm G7 support, did not prevent stock markets from tumbling on Monday and Tuesday. "No question that times are tough. But no question America will emerge," Bush said, stressing that "it''s going to take time" before the massive plan starts to have an major effect. "In a few weeks from now, the main elements of the new legislation will begin to kick into gear," said the US president, who acknowledged widespread economic gloom just 27 days before US voters choose his successor. "We also know that we''re the most dynamic economy in the world, that we have been through tough times before, and that we''re going to come through this time again," he said. Bush also warned the US public that popular retirement accounts are "going to take a hit" over the short term, but insisted: "In the long run, they''re going to be fine" as markets recover. Asked whether the US economy was now in a recession, Perino replied: "I don''t think that we know. Obviously, this next quarter''s probably not going to be a very good one. "Clearly, right now we are in a very distressing situation," said the spokeswoman, who noted that the classical definition of the term was two consecutive quarters of negative growth. Her comments came as the United States opened up a major new front in the battle against financial turmoil, sucking up huge amounts of corporate debt as European governments staged new rescues and nationalizations. The US Federal Reserve''s move to absorb short term company debt perked up volatile stock markets as they took new blows with Iceland nationalizing another bank and Russia setting up a 36-billion-dollar bank bailout. Russia also agreed to negotiate a four-billion-euro (5.4 billion dollar) emergency loan to help Iceland''s fight against national bankruptcy, while EU finance ministers increased a bank deposit guarantee ceiling from 30,000 euros to 50,000.

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