PARIS, Oct 4 (Reuters) - European leaders vowed after crisis talks on Saturday to do all they could to fend off the financial mayhem that snowballed out of Wall Street and is now hitting banks in Europe.

They made statements of principle rather than proposing new concrete measures to deal with the worst financial crisis since the 1930s.

"We jointly commit to ensure the soundness and stability of our banking and financial system and will take all the necessary measures to achieve this objective," said a joint statement issued from the meeting in Paris.

French President Nicolas Sarkozy, host, said that he and the leaders of Germany, Britain and Italy had agreed governments needed to act in a coordinated manner.

But he said he had never gone as far as to propose a pan-European crisis fund for banks -- something Berlin had balked at when talk of it surfaced a few days ago.

"We have taken a solemn undertaking as heads of states and government to support the banks and financial institutions in the face of this crisis," he told a joint news conference held with other leaders. German Chancellor Angela Merkel, keen not to become bankroller-in-chief as governments seek a joint response to the worst crisis since the 1930s, said those who caused the trouble must be made to help sort it out.

She stuck to that basic message at the news conference where leaders took turns to stress the need to restore confidence and work with other countries on short- and long-term strategy.

Sarkozy invited the three other leaders to the meeting in the hope of showing unity to restore confidence in the banking sector and an economy on the brink of recession in much of the developed world.

British Prime minister Gordon Brown said no sound and solvent bank would be allowed to fail for lack of liquidity and repeated the point at the news conference.

"We will continue to do whatever is necessary," he said.

The summit follows approval on Friday by the U.S. Congress of a $700-billion bank bailout plan to tackle a crisis sparked by a housing market collapse and a surge in bad mortgage debt.

"My administration will move as quickly as possible, but the benefits of this package will not all be felt immediately," U.S. President George W. Bush said in a radio address.

The fall-out from the crisis has redrawn the banking landscape on both sides of the Atlantic, paralysed wholesale money markets and caused huge volatility on stock markets.

As the leaders spoke, Belgium and Luxembourg were racing to find a buyer for what remained of bank and insurance group Fortis after the Netherlands government nationalised the bulk of the troubled Benelux outfit's Dutch businesses in a rush operation on Friday.

Officials said emergency meetings were taking place in Belgium about the rump left after the 16.8 billion euro nationalisation by the Dutch, which took place less than a week after a first rescue attempt in which the three governments injected 11.2 billion euros ($15.4 billion).

Luxembourg's economy minister said French bank BNP Paribas (other-otc: BNPQY.PK - news - people ) was one possible bidder for parts of Fortis and a solution had to be found by the end of the weekend.

IRISH PRECEDENT

The leaders in Paris highlighted several issues that needed to be addressed at a broader level, including a meeting of euro zone and EU finance ministers on Monday and Tuesday and, as soon as possible, a meeting of leaders of the G8 group of developed economic powers.

Among them was a call for restraints on executive pay and a pledge to work in the weeks ahead on the question of bank deposit insurance.

That is likely to focus on whether governments across the European Union should raise bank deposit protection levels to restore confidence.

Ireland annoyed some this week by promising to guarantee all bank deposits, a move that prompted some depositors in Britain to move savings to branches of Irish banks. In other countries, the protection level can be as low as 20,000 euros.

Merkel said that the European Central Bank and European Commission had been asked to discuss the matter with Dublin.

The four countries at the Paris summit are the four largest in Europe and also members of the G7 and G8 clubs of major industrial powers.

The G7 includes the United States, Japan and Canada as well and the G8 includes Russia as well.

European Central Bank President Jean-Claude Trichet and Jean-Claude Juncker, chairman and spokesman for the finance ministers of the euro currency zone, also attended the Paris summit, as did European Commission chief Jose Manuel Barroso.

The $700 billion bail-out approved by the U.S. Congress is earmarked to buy up assets that turned toxic when the U.S. housing market and sub-prime mortgage market collapsed.

Stocks, which had been higher before the vote, dropped, with the S&P 500 index closing at its lowest level in almost four years as investors focused less on recession risk rather than the hope of relief.

(Writing by Brian Love; Editing by Richard Balmforth) (reporting by Iain Rogers in Berlin, Matt Falloon in London, Philip Blenkinsop in Brussels, Michele Sinner in Luxembourg, Ilona Wissenbach, Tamora Vidaillet, Crispian Balmer in Paris)

Today Edward Liddy, AIG’s new CEO, announced what the troubled insurance company is putting up for sale, and it’s a lot. Other than the company’s US property and casualty businesses, and its international general insurance business (companies with a combined annual revenue of about $40 billion) most everything is on the block. He is hoping to retain a majority interest in the company’s top notch international life insurance business as well.

He wants to do big deals and do them quickly, in a bid to pay off the expensive bridge loan the company got from the New York Federal Reserve two weeks ago. AIG has already pulled down $61 billion of the $85 billion offered, at an interest rate currently around 12.5%. The company is also paying 8% interest on the balance it has not drawn down.

In his first conference call with investors, Liddy fielded a good numbmer of questions about why the company didn’t put the Fed deal to a vote of shareholders. Many analysts concluded their exchanges with the CEO with a wistful “Good luck.” Clearly it’s a tough market to be selling anything especially with lending so restrained.

But Liddy’s tone was unrelentingly businesslike and matter of fact. He promised in conclusion to be in better touch with them than perhaps the company had been in the past. “A strong viable and nimble AIG will emerge from this crisis,” Liddy promised. He encouraged investors to think of the Fed deal as an essential lifeline and one that would have suffered for waiting days or weeks for a shareholder vote.

One of the thorniest issues for AIG is the one that brought is to its knees in the first place: the rapid rise in collateral it has had to post to cover credit default swaps. Most of the $61 billion drawn down, Liddy said, has done to its securities lending arm, AIG Financial Products, “in round numbers $53 or $54 billion,” he said. “I liken it to filling up a bathtub, you fill up initially and then it starts to slow down.” Though he did clearly say AIG expects to borrow more from the Fed, he didn’t say how much. When asked if he might have to go back for more than $85 billion, Liddy said he never likes to say never, but that they hoped to borrow as little as possible. He noted that an analysis by Blackrock of these deals showed that even under the worst case thought possible, the “intrinsic value is significantly above where we have those market. The question is can we retain some of the upside?” And that’s a question Liddy can’t answer.

For Liddy and his managers the biggest challenge right now is keeping the various companies operating at a high level and that means keeping people. As of today some know they will be leaving the mother ship no matter what. “Certainty is better than uncertainty,” said Liddy. “So by declaring today what businesses are a part of us going forward and which are not, at least it lets people know where they sit.” Just to be sure they stay seated, he’s put in place “a full array of retention agreements and enhanced severance agreements. “For many reasons, for our people and our policy holders, selling the businesses to brand name companies, with strong ratings, strong balance sheets, and well capitalized, that is a key.”

These businesses could be game changing for the buyers who get them he notes, and he says he’s heard from dozens of interested parties already.

Add the Terminator to the long list of people seeking a handout from Henry Paulson. Late on Oct. 2, California Governor Arnold Schwarzenegger sent a letter to the U.S. Treasury Secretary saying he may need a $7 billion short-term loan from the federal government to help the state make its payroll at the end of the month.

The governor's outstretched hand is just the latest sign of the severity of the financial vice squeezing the nation (BusinessWeek.com, 9/29/08). Everyone from small business people to homeowners to the largest state in the nation is finding it difficult to get a loan. "Right now this credit crunch impacts just about everyone who wants to borrow," says Doug Charchenko, head of the fixed-income department at broker Wedbush Morgan Securities. "New issues have not been able to get into the market. Institutions aren't buying bonds, they're hoarding cash."

Such a federal loan to a state would substantially broaden the federal government's efforts to stem the credit crisis—and could well lead to similar requests from other strapped states. Jennifer Zuccarelli, director of public affairs at the Treasury, confirmed that California’s request had been received but would not comment further on whether it is under consideration or when a decision might be reached.

Municipal Issues Seize Up

The $700 billion question is whether the bailout bill passed by Congress (BusinessWeek.com, 10/3/08) this week will restore confidence in financial markets and get investors buying again. "Hopefully this recovery plan will end the paralysis in credit markets and allow the state to conduct its short-term borrowing," says Thomas Dresslar, a spokesman for California Treasurer Bill Lockyer.

"There's a lot of disruption in the market," adds David Hitchcock, the head of municipal finance at credit rating agency Standard & Poor's. "That could change any day."

Municipal bond insiders say that while there is some interest from small investors looking to purchase municipal bonds that are already trading, the market for new issues has almost totally dried up. That's because there is no sign that banks, insurance companies, or other institutional investors are jumping back into the market yet. Matt Favian, managing director of Municipal Market Advisors, a research firm, figures some $15 billion in bonds from more than 150 municipal issuers are waiting to be sold. "To the extent people are more confident with banks, to the extent it helps confidence, [passage of the bailout bill] should begin to open up the markets so issuers can issue bonds," he says.

Where Are the Underwriters?

The frozen state of the municipal bond markets (BusinessWeek.com, 10/1/08) is a function not just of the lack of investors but also of the difficulties faced by many of the key players in the underwriting industry. Major investment banks that issued municipal bonds, including Bear Stearns and Lehman Brothers, are out of business. Municipal bond insurers, such as MBIA (MBI) and Ambac, saw their own credit collapse earlier this year when some of the riskier new investments they had been covering began to implode.

California's cash crunch is a symptom of its poor financial management in recent years, analysts say. The state has had multibillion-dollar shortfalls between its revenues and expenses dating back to the last recession in 2001.

Tiger Woods hits a tee shot in the second round of the 108th U.S. Open on Jun. 13, 2008 in San Diego, Calif

Tiger Woods strolls into our interview room in New York's W Hotel (HOT). He's wearing jeans, Nike (NKE) gym shoes, a white T-shirt, and wraparound sunglasses. While recovering from knee surgery, Woods is sidelined from golf tournaments and spending more time on his business dealings. But even at his desk in his Orlando office, he is the plain-clothes type. "My dad used to say," Tiger tells me, " 'Just because you dress up in a coat and tie, it doesn't influence your intelligence.' "

I'm tempted to yank the tie from around my neck. But then I stop, resisting the pull of his celebrity, which has mesmerized so many. Woods' fashionable on-course golf wear has made Nike the No. 1 seller of golf apparel worldwide, with more than $300 million in revenue. While he's rehabbing his knee—fans will recall how he winced his way to victory at the U.S. Open in June—sports valuation experts estimate Nike could be out more than $70 million in swoosh exposure. Buick (GM) executives are sweating, as well. Since Woods showed up in its car ads in 2000, sales have climbed steadily among the under-40 crowd. His connection with fans is the reason earnings for PGA Tour players have surged 200% since 1998, to an estimated $374.5 million.

So it's little wonder that this year, a panel of sports experts voted him No. 1 in BusinessWeek's second annual Power 100 list of the most influential people in the sports business. "Tiger is such a powerful international presence," says Sean McManus, president of CBS (CBS) News and Sports. "There aren't two or three people in the world that are more famous than Tiger."

For all his fist-pumping bravado on the course, Woods, 32, comes across as a humble guy in person. This is a man who will make some $90 million from sponsors this year and has earned more than $750 million in endorsements throughout his 12-year career—plus more than $82 million from his 65 PGA Tour titles. Of course, he owns a yacht and a gargantuan estate. Yet except for his wedding ring and watch, he doesn't do bling. Advertisers say he's easy to work with, and he doesn't push for preferential treatment on the PGA Tour. "He has never said, 'I absolutely think such-and-such has to be this way,' " says PGA Tour Commissioner Timothy W. Finchem.

But make no mistake: Woods is hands on. A self-described "gamer" since the days of Atari's Pong, Woods has spent hours with programmers at Electronic Arts (ERTS) explaining how putts roll on the courses the pros play, so virtual greens in the Tiger Woods PGA Tour game series are contoured like actual ones. "He is a stickler for perfection," says EA Sports President Peter Moore.

These days, Woods is throwing himself into a new endeavor. He arrived in New York fresh from a tour of Al Ruwaya, a 7,800-yard, par 72 course in Dubai, the first he's designed. In the three hours Woods spent walking the course, he offered lots of approval, says Bryon C. Bell, president of Tiger Woods Design, but occasionally requested changes, such as a sand bunker on the fourth hole that he wanted moved from the left side of the fairway to the right for better balance.

After Woods and I have talked for close to 30 minutes, I get a nod from his agent that our time is nearly up. Tiger has other engagements, including a taping of Late Night with Conan O'Brien, meetings with EA Sports executives, and that night, hanging out with Olympic swimmer Michael Phelps. Woods has no time to go back to the W Hotel's presidential suite to change. No matter. He swaps his jeans and T-shirt for a black suit—no tie, of course—right on the spot. As he changes, I ask about his injured knee. "Getting better," he says. "I'm busting my ass to try and get back."

"Now's the time to make tough decisions," says George Cloutier, chief executive at American Management Services, a small-business consulting firm in Orlando, Fla.

Cutting costs can help free up much needed cash flow during a crunch, but when the economy is expected to stay down indefinitely, more dramatic measures may be in order, he says.

Here are five tactics to help keep your dwindling business capital flowing:

Slash Expenses

Streamlining your business can help you stay in the black even when customers make fewer purchases. Be sure to call in overdue accounts receivables, sell off unsold inventory and analyze expenses such as office space, supplies and even your company's phone bills.

"Cut your costs viciously," says Cloutier. For instance, if you're long-time delivery vendor isn't fulfilling orders on time and it's costing you money, cut them loose. The same is true for employees who aren't pulling their weight. You might even need to do away with some benefits. While having to let go of a trusted staff member or business partner is never ideal, when the economy sinks, business owners need to make tough calls.

Eliminate Unprofitable Operations

Consider spinning off unprofitable business segments, suggests Victor Cheng, a small-business consultant in San Francisco. "Focusing on your core business"—especially if your other divisions are losing money—will serve you in a downturn, he says. To help you figure out what's working and what's not, schedule an appraisal of your business's operations.

Seek Alternative Funding

Some business owners take on a second job. Others use consulting to pad their wallets. One thing is for certain: If you're relying on a credit line to float your business until, say, after the holidays, now's the time to create a backup plan. "Don't assume that line of credit will be there," says Cheng. "If you are in that kind of situation, you either have to have a back up financing source or back up revenue source."

Embrace Incentives

As the nation's unemployment rate ticks up, business owners should think about restructuring their company's compensation, says Dave Waddell, president of Waddell & Associates, an investment firm in Memphis, Tenn. He suggests linking more employee pay to variable incentives such as commissions, which are payments linked to specific sales targets. For instance, if 20% of an employee's compensation stems from commissions, make it 50%.

Getty Images

While commissions generally work well for sales staff, linking bonuses and other financial incentives to a company's performance is another compensation technique, which generally goes for everyone. "If employees hit goals for the firm, the firm is going to do well even in tough times," says Waddell.

Cut Production Costs

"The only way to make it through a recession is to be a low-cost producer," says Bob Prosen, a small business management consultant in Dallas. Think about it this way: Inefficient competitors can survive for a time at their current cost structures, but in the end, they'll have to either raise prices or go out of business. In contrast, a low-cost producer may try lowering prices to attract added sales, says Prosen. "You're better off taking a little less profit to keep the business going."