Global Economic News
Japan, Korea To Implement Emergency Financial Programs
Oct. 26 (EIRNS)The Japanese government will release an emergency financial plan early this week, according to NHK, Japan's public broadcaster. The plan will revive the Banks' Shareholding Purchase Corp., an entity set up in 2002, but suspended in 2006, to purchase shares of corporations which were held by banks. Japanese banks hold huge portions of corporate stock, and their steep decline leaves the banks below the required reserve limits.
The government will call on the Bank of Japan to buy the stocks of the financial institutions themselves, and may use public funds to prop up the banks, although this would require legal changes. Japan's stock market collapsed again on Oct. 24.
South Korea's political and financial leadership is holding an emergency meeting on Oct. 27 to determine emergency measures. South Korea's stock exchange fell 20% this past week alone, while the won has fallen by 35% this year.
Financial Disintegration Turns 'Food Crisis' into Starvation
Oct. 24 (EIRNS)The number of human beings "seriously undernourished"in danger of starving to deathhas increased by 75 million during the global financial disintegration since July 2007, with aid pledges from the July 2008 Rome Food Crisis Summit going unfulfilled in favor of bank bailouts, and farmers being forced to cut back plantings due to unpayable costs of fertilizer and other inputs. This is reported by the UN Food and Agriculture Organization (FAO), and headlined in the Washington Post on Oct.24.
In the burst of commodity speculation by banks and hedge funds pulling out of collapsing financial bubbles, from last Fall through this Spring, the cost of food imports to nations around the world jumped by 29%, on average for all foods. The cost of fertilizer worldwide jumped by far more than that, and riots broke out as poor and middle class populations were faced with "price famines." Now FAO says that of the $12.3 billion in food aid and agricultural investment pledged at the Rome summit to support food production and consumption, only $1 billion has been disbursed; and many governments are saying they can't afford the aid they pledged because of the financial collapse and their bailouts of banks!
Even though the prices of agricultural commodities have plunged again since Spring, this does not make a food "recovery." In fact, farmers in many countries, who are paying 3 to 5 times for fertilizer what they paid one year ago, and being pushed, by the new commodity price collapses, into cutting back on their planting and marketing of crops. That may make food shortages even worse, compared to consumption, increasing severe undernourishment further.
Without a New Bretton Woods monetary order which freezes unpayable debt claims, stabilizes currencies and commodity prices, and facilitates great projects of infrastructure, the whipsawing of agriculture will drive food consumption continually down to new Dark Age conditions.
Speculative Attack on Danish Currency
Oct. 25 (EIRNS)The Danish Central Bank today had to once again raise its interest rates to resist a speculative attack on the krone, bringing the rate to 5.50%. Already on Oct. 8, the bank had to raise its rate by 40 basis points. While so far the Danish rate was closely following the rates of the euro, a widening gap now appears, since the European Central Bank (ECB) lowered its interest rates on Oct. 10. Financial wolves claim this is the price Denmark is paying for having rejected the Maastricht Treaty and not being part of the European Union.
Car Industry Collapse Will 'Put To Sleep' Steel Production
Oct. 30 (EIRNS)According to the French daily Le Figaro Economie today, Arcelor Mittal, the world's largest steel producer, is considering cutting its production by 15% worldwide, as a consequence of the sharp collapse of the auto industry.
French car producer PSA Peugeot Citroen announced that it would reduce production by 30%, and Renault by 20%, over the last quarter of 2008. On Oct 29, after a meeting with the Arcelor management, trade union officials revealed that Arcelor Mittal will put 13 of its blast furnaces in Europe "to sleep" between mid-November and the end of January, mainly in France, Belgium, Luxemburg, and Germany. Workers are being called on to take their legally mandated holidays, while interim jobs are scrapped.
* In France, the company will reduce 50% of the output of its second-largest production site at Fos-sur-Mer (Marseille), where today there are 3,400 workers. The Fos-sur-Mer plant is on the Mediterranean, which facilitates shipping flat carbon steel supplies for car producers in Spain, Italy, and Turkey. Trade union officials fear the worst, since the plant needs to produce 4.8 million tons per year, or 380,000 tons per month, in order to be profitable. In October, production was only 252,000 tons, and it is expected to fall to 119,000 tons in December, driving the production site to closure. Arcelor's blast furnace in Florange (3,300 workers) will also be put to sleep, while Arcelor Dunkerque is also reducing production.
* In Luxemburg, Arcelor's steel capacity will be reduced by 60-80%.
* In Belgium, according to the Belgian steelworkers unions, Arcelor's smelting furnace No. 6 in Seraing, will be shut down in two weeks until at least mid-February.
* In Germany, Arcelor will reduce production at the sites of Bremen, Eko, and Stahl.