Obama sees long haul ahead, China offers help

By Eddie Evans and Angus MacSwan

NEW YORK/LONDON (Reuters) - U.S. President-elect Barack Obama said on Saturday he was crafting a two-year plan to fight an economic crisis of "historic proportions" and Chinese leader Hu Jintao said his country was ready to play a big role in the global effort.

Hu, U.S. President George W. Bush and other leaders at the Asia-Pacific Economic Cooperation forum called for a global free trade deal to offset the economic crisis.

U.S. automaker General Motors Corp was considering "all options," including bankruptcy, because of its liquidity problems, according to The Wall Street Journal.

Citigroup Inc was in talks with the U.S. government amid doubts about its ability to survive.

Obama, who takes over from Bush on January 20, said, "There are no quick or easy fixes to this crisis, which has been many years in the making, and it's likely to get worse before it gets better."

He was speaking in a radio address on Saturday, the day after reports that he had chosen New York Federal Reserve President Timothy Geithner as Treasury secretary rallied stock markets.

Obama, a Democrat, said swift and bold action was needed to prevent a deep slump, a spiral of falling prices and millions of job losses.

He signaled he was prepared to push for a much larger package than the $175 billion stimulus measure he called for in his election campaign. His plan would set a goal of creating 2.5 million more jobs by January 2011.

"The news this week has only reinforced the fact that we are facing an economic crisis of historic proportions," Obama said.

CHINA TO THE RESCUE?

In Lima, Chinese President Hu said the Asian powerhouse would work alongside the international community to strengthen cooperation and protect international markets.

China has been a major driver of the world economy as its rapid expansion fueled demand for raw materials. But with so many troubled countries looking to China to ease their financial woes, Beijing had been wary of taking a leading role.

"China is within the scope of its abilities taking major efforts to address the financial crisis," Hu said in a speech to business leaders.

This included providing support for liquidity for domestic financial institutions and coordinating macroeconomic policy with other countries.

The Wall Street Journal said General Motors was considering "all options" because of its liquidity problems. A GM spokesman told the paper that management was doing everything it could to avoid a bankruptcy filing.