World Economic News
German Fin Min Warns of Deadly Crisis of Euro, Maastricht System
During the parliamentary session in Berlin that followed Chancellor Angela Merkel's first State of Germany address Nov. 30, the new Finance Minister Peer Steinbrueck drew a gloomy picture of how the European Union and the euro would look in 2007, should Germany fail to meet the Maastricht criteria by that time. Steinbrueck insisted that Germany meet those criteria, otherwise this "third crisis," after the failed EU Charter and the failed solution of the EU budget problem, would provoke a "severe crisis of the euro" and the entire monetary system around it.
Whether Steinbrueck is really convinced that the criteria will be met, remains as much of an open question as the other question: whether he and his ministry are in any way prepared for the worst-case scenario he just portrayed. None of the leading countries of the EU will be able to meet the criteria in 2007, as none has been able to meet them during 2005, nor will they be able to meet them during 2006.
Fears of Steel Glut Result in Production Cuts
The slowdown of the world economy has been reflected in the latest fear of glut in the international steel market. In order to remain viable, some of the producers are cutting down on production, putting workers out of jobs, and hoping to keep prices high.
One such situation is in Europe. European steel production fell for a sixth consecutive month in July, showing a 9.4% drop from a year ago. The production in the 25-member EU in July was 14.4 million tons. Europe's benchmark steel prices have plunged 33% this year.
In the United States, Mittal Steel Co., the world's largest steel group, has no plans to restart the furnace of its Weirton, WVa. steel plant it acquired recently. Noticing a slump in the market, Weirton's furnaces were idled, eliminating 730 jobs.
World steel production is still showing growth however, because of China's large consumption. China, long a major importer of steel, has just recently become an exporter of steel. That means China is no longer consuming the 290 million tons of steel it produces annually. Reports indicate 40 million tons will be slated for export next year.
The drastic price drop has created some fear among Indian steel manufacturers. India is in the process of doubling its steel production capacity by 2010.