WASHINGTON (CNN) -- President Obama and British Prime Minister Gordon Brown said Tuesday that the global economy would recover from the recent sharp downturn but that it would require a common effort to combat protectionist impulses, coordinate economic stimulus efforts and update antiquated regulatory structures.
Prime Minister Gordon Brown and President Obama met in the Oval Office on Tuesday.
Meeting in the Oval Office, the two leaders added that the "special relationship" between the United States and Great Britain would not only survive the economic turmoil but would be strengthened in the long term.
Obama also dismissed worries spurred by the "day to day gyrations of the stock market," arguing that they were the byproduct of a perfect storm of losses generated by "lax regulation," "massive overleverage" and "huge systemic risks taken by [regulated and] unregulated institutions."
Those losses, Obama said, were now working their way through the system.
"There's going to be a natural reaction," the president noted. "What you're now seeing is [that] profit and earning ratios are getting to the point ... where buying stocks is a good deal if you have a long-term perspective."
Obama added that although businesses were starting to see new hiring potential as the $787 billion stimulus package takes hold, the recovery would not happen overnight.
"We dug a very deep hole for ourselves," he said. The recovery will be "full of fits and starts," though both the American and the world economy will eventually be "better off for it."
The president and the prime minister agreed that the Group of 20 countries needed to more effectively coordinate their economic stimulus plans. The subject is certain to dominate a planned meeting of the G-20 nations in London in April.
The G-20 includes the G-7 leading industrialized nations -- Canada, France, Germany, Italy, Japan, the United Kingdom and the United States -- as well as the world's largest developing economies: Argentina, Australia, Brazil, China, India, Indonesia, Mexico, Russia, Saudi Arabia, South Africa, South Korea and Turkey, plus the European Union.
Brown reiterated his recent call for "a global New Deal" to retrigger growth, reform global institutions and lay the groundwork for a more environmentally friendly economic future.
A "green, low-carbon" recovery is possible, he said. If countries such as the United States and Britain work together, "the opportunities are there."
The two leaders agreed that a turn towards protectionism would only accelerate the economic decline.
"Globalization can be an enormous force for good," Obama said. But it is a mistake to keep a "1930s regulatory system in place in most countries" when "trillions of dollars ... can now move at the speed of light."
Brown noted that the "special relationship" between the United States and Britain remained a strong "partnership is purpose that is borne out of shared values [and] driven forward by the need to act in unity to address world's problems."
Obama agreed, adding that the relationship, bolstered by a common language and culture is "a link, a bond there that will not break."
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