Obama: Europe Debt Crisis Affects U.S.

U.S. President Barack Obama warned Thursday Europe must "act fast" on a debt crisis threatening the fragile U.S. recovery and accused China of gaming the global currency and trading systems.

In a White House news conference, Obama also said Republicans must pass his $447 billion dollar jobs bill as insurance against a double dip recession and warned Pakistan was hedging its bets by maintaining ties with extremists.

Sharpening economic frustration over the stagnant U.S. recovery and the jobless crisis dominated the 75-minute session, against a backdrop of Obama's plunging approval ratings ahead of his 2012 reelection bid.

He warned that a potential European debt meltdown needed to be averted by swift action from the continent's leaders.

"They have got to act fast," Obama said.

"We have got a G20 meeting coming up in November. My strong hope is that by the time of that G20 meeting, that they have a very clear concrete plan of action that is sufficient to the task."

The president argued that the Eurozone crisis made it even more important for Congress to pass his jobs plan, which he said would give a "jolt" to the sickly economy at a time of dangerous external threats.

"The problems Europe is having today could have a very real effect on our economy at a time when it's already fragile," Obama said.

"This jobs bill will help guard against another downturn if the situation in Europe gets any worse," Obama said in his first formal news conference since unveiling the plan last month.

Earlier, Vice President Joe Biden warned of the risk of "international contagion" if Europe did not forestall its crisis soon, but acknowledged the continent's leaders faced "wrenching" political choices.

Obama also waded into the debate about China's currency policies, though stopped short of endorsing a Senate bill to punish Beijing, citing concern that it could conflict with US obligations to the World Trade Organization.

"China has been very aggressive in gaming the trading system to its advantage and to the disadvantage of other countries, particularly the United States," Obama said.

"And currency manipulation is one example of it, or at least intervening in the currency markets in ways that have led their currency to be valued lower than the market would normally dictate," Obama said.

The president noted that Beijing had allowed the yuan to rise in value over the last year, but demanded more action.

"We have seen some improvement, some slight appreciation over the last year but it is not enough."

The president also responded to comments by Mike Mullen, the former chairman of the Joint Chiefs of Staff, who accused Pakistani intelligence before he retired last week of maintaining close links to the extremist Haqqani network.

"I think they have hedged their bets in terms of what Afghanistan would look like and part of hedging their bets is having interactions with some of the unsavory characters who they think might end up regaining power in Afghanistan after coalition forces have left," Obama said.

"What we've tried to persuade Pakistan of is that it is in their interest to have a stable Afghanistan, that they should not be feeling threatened by a stable, independent Afghanistan," he added.

But Obama said "there is no doubt that there's some connections the Pakistani military and intelligence services have with certain individuals that we find troubling."

Islamabad has denied any links between the Haqqanis, accused of killing US troops and plotting attacks on Kabul, and its intelligence services.

Surveying the current dire economic conditions clouding his hopes of winning a second term next year, Obama said anti-Wall Street protests gathering in New York and other U.S. cities were a symptom of the public mood.

"I have seen it on TV and I think it expresses the frustration that the American people feel," Obama said, arguing that people disliked top bankers and financial firms which caused the, crisis trying to fight regulation.

"You're still seeing some of the same folks who acted irresponsibly trying to fight efforts to crack down on abusive practices that got us into this problem in the first place," he said.

His comments followed a furor over a plan by Bank of America to introduce a $5 monthly charge on customers who use debit cards after seeing other fees outlawed under Obama's financial regulation law.

The president, who has adopted a populist stance and called out senior Republican foes by name after the public lost confidence in his economic management, implored lawmakers to pass his jobs bill.

"I want an explanation as to why we shouldn't be doing it -- each component part," he said of a bill that finances teachers, gives tax cuts to small businesses and the middle class and offers tax breaks for job hunting veterans.

"I would love nothing more than to see Congress act so aggressively that I can't campaign against them as a do-nothing Congress."