Finance crisis shows teeth with mass Citigroup cuts
1 hr 44 mins ago
http://news.yahoo.com/s/afp/20081117/ts_afp/financeeconomyworld
NEW YORK (AFP) – A brutal financial crisis showed its teeth on Monday as the banking giant Citigroup announced a massive 50,000 job cuts and automakers begged governments to save them amid a spreading global recession.
Japan became the latest giant economy to confirm it had fallen into recession, following Germany and the eurozone last week.
Citigroup said here that the global financial crisis and four consecutive quarters of heavy losses forced it to cut its global workforce by 50,000, bringing it to around 300,000, and further job cuts would follow.
In Washington a battle was looming in the US Congress, where Democrats were preparing to push for a second 25 billion dollars in aid for the auto industry, but the White House warned car makers must make do with existing funds.
"The administration does not want US automakers to fail," White House spokeswoman Dana Perino said. But opening the government bailout program for banks to other sectors "is a slippery slope," she added.
"If automakers receive assistance from the TARP (financial bailout) program, other industries will follow."
Across the Atlantic, reports said desperate executives from automaker Opel were to plead with German Chancellor Angela Merkel for help to keep it alive as its US parent company General Motors struggles to avoid bankruptcy.
Press reports said that Opel would ask Merkel for around one billion euros (1.3 billion dollars) in guarantees at a meeting on Monday. But German Finance Minister Peer Steinbrueck has ruled out a rescue package for the auto sector.
World stock markets reacted with little enthusiasm to a weekend summit in Washington called to contain the global finance crisis, which stemmed from a collapse in US mortgages due to a profusion of bad debt on high-risk loans.
Investors in Asia and Europe were unimpressed with a vague pledge made on Saturday by leaders in the Group of 20 to join forces to galvanize growth and overhaul the world's financial architecture.
The group stopped short of announcing specific steps such as coordinated stimulus spending.
"The statement was a bland recitation of past policy initiatives, coupled with comments that were blindingly obvious," said economists at UBS.
"Call us hopelessly optimistic, but we would have thought the heads of state of 20 troubled economies, gathering in one place, could have agreed to specific, coordinated actions to address the immediate problem of global recession," said Carl Weinberg, chief economist at High Frequency Economics.
European stock markets closed sharply lower Monday after more bad news, following a mixed performance in Asia.
In London, the FTSE 100 index of leading shares closed down 2.38 percent at 4,132.16 points. In Paris, the CAC 40 shed 3.32 percent to 3,182.03 points and in Frankfurt the DAX lost 3.25 percent to 4,557.27 points.
US stocks opened weaker, the Dow Jones Industrial Average dropping 2.35 percent to 8,297.79 in early trade and the Nasdaq down 1.84 percent to 1,488.94.
Monday saw no let-up in the flow of bad economic news. Official data showed Japan, the world's second largest economy, contracted 0.1 percent in the third quarter after shrinking 0.9 percent in the second.
Recession is defined as two quarters of negative growth in a row.
"This is not going to be a short or painless recession," warned Noriko Hama, a professor and economist at Doshisha University.
The Bank of France predicted the French economy was likely to contract by 0.5 percent in the last quarter of the year, leaving growth for the year at just 0.9 percent.
France narrowly escaped recession with growth of 0.1 percent in the third quarter after its economy shrank 0.3 percent in the second.
The Confederation of British Industry (CBI), an employers' organisation, said Britain would likely be in recession for most of 2009 and unemployment would peak at around 2.9 million in mid-2010.
British Prime Minister Gordon Brown on Monday warned of a risk of deflation, a protracted general fall in prices, next year, echoing a recent similar prediction made by the Bank of England.
With Germany, Italy and Ireland already in recession, European Commission chief Jose Manuel Barroso said Europe needed a continent-wide fiscal stimulus plan. "Exceptional moments... need exceptional measures," he said.
-- Dow Jones Newswires contributed to this report
1 hr 44 mins ago
http://news.yahoo.com/s/afp/20081117/ts_afp/financeeconomyworld
NEW YORK (AFP) – A brutal financial crisis showed its teeth on Monday as the banking giant Citigroup announced a massive 50,000 job cuts and automakers begged governments to save them amid a spreading global recession.
Japan became the latest giant economy to confirm it had fallen into recession, following Germany and the eurozone last week.
Citigroup said here that the global financial crisis and four consecutive quarters of heavy losses forced it to cut its global workforce by 50,000, bringing it to around 300,000, and further job cuts would follow.
In Washington a battle was looming in the US Congress, where Democrats were preparing to push for a second 25 billion dollars in aid for the auto industry, but the White House warned car makers must make do with existing funds.
"The administration does not want US automakers to fail," White House spokeswoman Dana Perino said. But opening the government bailout program for banks to other sectors "is a slippery slope," she added.
"If automakers receive assistance from the TARP (financial bailout) program, other industries will follow."
Across the Atlantic, reports said desperate executives from automaker Opel were to plead with German Chancellor Angela Merkel for help to keep it alive as its US parent company General Motors struggles to avoid bankruptcy.
Press reports said that Opel would ask Merkel for around one billion euros (1.3 billion dollars) in guarantees at a meeting on Monday. But German Finance Minister Peer Steinbrueck has ruled out a rescue package for the auto sector.
World stock markets reacted with little enthusiasm to a weekend summit in Washington called to contain the global finance crisis, which stemmed from a collapse in US mortgages due to a profusion of bad debt on high-risk loans.
Investors in Asia and Europe were unimpressed with a vague pledge made on Saturday by leaders in the Group of 20 to join forces to galvanize growth and overhaul the world's financial architecture.
The group stopped short of announcing specific steps such as coordinated stimulus spending.
"The statement was a bland recitation of past policy initiatives, coupled with comments that were blindingly obvious," said economists at UBS.
"Call us hopelessly optimistic, but we would have thought the heads of state of 20 troubled economies, gathering in one place, could have agreed to specific, coordinated actions to address the immediate problem of global recession," said Carl Weinberg, chief economist at High Frequency Economics.
European stock markets closed sharply lower Monday after more bad news, following a mixed performance in Asia.
In London, the FTSE 100 index of leading shares closed down 2.38 percent at 4,132.16 points. In Paris, the CAC 40 shed 3.32 percent to 3,182.03 points and in Frankfurt the DAX lost 3.25 percent to 4,557.27 points.
US stocks opened weaker, the Dow Jones Industrial Average dropping 2.35 percent to 8,297.79 in early trade and the Nasdaq down 1.84 percent to 1,488.94.
Monday saw no let-up in the flow of bad economic news. Official data showed Japan, the world's second largest economy, contracted 0.1 percent in the third quarter after shrinking 0.9 percent in the second.
Recession is defined as two quarters of negative growth in a row.
"This is not going to be a short or painless recession," warned Noriko Hama, a professor and economist at Doshisha University.
The Bank of France predicted the French economy was likely to contract by 0.5 percent in the last quarter of the year, leaving growth for the year at just 0.9 percent.
France narrowly escaped recession with growth of 0.1 percent in the third quarter after its economy shrank 0.3 percent in the second.
The Confederation of British Industry (CBI), an employers' organisation, said Britain would likely be in recession for most of 2009 and unemployment would peak at around 2.9 million in mid-2010.
British Prime Minister Gordon Brown on Monday warned of a risk of deflation, a protracted general fall in prices, next year, echoing a recent similar prediction made by the Bank of England.
With Germany, Italy and Ireland already in recession, European Commission chief Jose Manuel Barroso said Europe needed a continent-wide fiscal stimulus plan. "Exceptional moments... need exceptional measures," he said.
-- Dow Jones Newswires contributed to this report
