Here is the Friday, October 10th, 2008 edition of what’s making news and interesting reads from around the world. Also please note that off to the left there are two widgets with updates on news from Asia and the world in a separate page: Around Asia & Around the World New Feeds.
The EU in Crisis
The club of 27 governments has been relegated to bit-player status in the drama as global central banks coordinate rate cuts and individual European nations move unilaterally to fortify their own banking systems. EU finance ministers this week rejected the idea of a region-wide bailout fund. Beyond impromptu joint efforts to aid Fortis, Dexia SA and other cross-border European banks, the EU is essentially stymied by its requirement that major decisions be unanimous and by its lack of a central financial regulator. More from Bloomberg News.
Iceland’s Kaupthing Blames Collapse on British Government
Kaupthing – among Britain’s 20 largest banks – became the third financial institution to be taken over by the Icelandic government this week, after Chancellor Alistair Darling seized its UK operation on Tuesday and ruled out help through the bail-out. Sigurdur Einarsson, the bank’s chairman, said the seizure of the UK arm directly led to the collapse of the entire group. “It is very sad, unfortunate and disappointing,” he said. Meanwhile a fierce diplomatic row broke out between the UK and Iceland with Prime Minister Gordon Brown accusing Iceland of “completely unacceptable” behaviour by not recompensing UK savers in the failed Icesave bank. Mr Brown said he is freezing assets of Icelandic companies in the UK as a result. More from the UK Telegraph.
Asian Markets Plunge on Wall Street Sell-Off
It seems like only yesterday I wrote something similiar. Stock markets in Asia plunged on Friday as investor sentiment was battered by the overnight rout on Wall Street, confirmation that Singapore has slid into recession and news of a financial-sector bankruptcy in Japan. Investors were reeling from the overnight developments on Wall Street, where the Dow Jones industrial average plummeted 7.3 percent, or 678 points, closing below the 9,000-mark for the first time since 2003. In Tokyo, the Nikkei 225 index — already shaken by a nearly 10 percent drop on Wednesday — slumped another 9.6 percent on Friday, closing at 8,276.43. More from the New York Times and from Euro News.
Oil Slides as OPEC Calls Emergency Meeting
Oil prices plunged below $85 a barrel on Thursday, the lowest level in a year, as Opec, the oil exporting countries’ cartel, called an emergency meeting to discuss reducing its crude production to halt the collapse in prices. The announcement came as crude oil futures in New York fell almost $5 to an intraday low of $84.19 a barrel, the lowest level since October 2007. In late afternoon trading in New York, oil was down $4.14 to $84.81 a barrel.
The drop suggested that the market was firmly focused on the impact of the financial crisis on global economic growth and energy demand next year, rather than in the cartel’s action. The cartel, which controls 40 per cent of the world’s oil output, said in an unusually frank statement that it was concerned about the “deteriorating economic conditions with contagion risks” and will meet in four weeks to tackle the problem. More from the Financial Times.
Gigantic Swiss Banks Hold Steady — For Now
Der Spiegel looks at how Switzerland’s banking sector is coping with the global financial meltdown.
Many are fearful of the consequences should UBS capsize. Switzerland’s gross domestic product totals 512 billion Swiss francs (€332.1 billion). UBS’s balance sheet adds up to 2 trillion Swiss francs (€1.3 trillion) — four times as much. Even Switzerland’s second biggest bank, Credit Suisse, oversees assets totalling 1.2 trillion Swiss francs (€778.4 billion). Together UBS and Credit Suisse have over 640 billion Swiss francs (€415.1 billion) in outstanding loans.
“We owe this crisis an uncomfortable revelation: UBS and Credit Suisse are too big for Switzerland,” wrote the ex-editor-in-chief of the German weekly Die Zeit, Roger de Weck, last week in the Swiss periodical Das Magazin. “If they went bankrupt, a flourishing country would be ruined.”