Ailing economies get no respite
The global economy is still on the way of deteriorating, and the signs of distress mounted last Friday. Shares in the US bank Citigroup Inc are plunging; oil prices are falling and the future of US carmakers hanging in the balance.
Given the economic slowdown and turmoil in financial market, the Bank of Japan left interest rates unchanged at 0.3 percent. This shows there is a long way for recovery. Global stock reaching a record low in five years causes fears more companies might not survive amid this economic turbulence. But there are hopes for government could do more help to make market recover.
According to a person who is familiar with the situation, Citigroup is considering several ways to save its market, including selling part of the company or merging with another firm. Such woes of a deepening recession made most Asia stocks turn sharply down last Friday. However, with the help by a rise in US stock futures, shares rebounded later. There is also hope for China does more support for the market.
A possible rescue plan of the Big Three US carmakers makes things more uncertain. A business survival plan was required by democratic congressional leaders to executives of General Motors, Ford Motor and Chrysler LLC, with giving loans up to $25 billion as exchange. Lawmakers said the plan could be considered the week of Dec 8.
What is worse, a US government report showed the number of Americans who receive jobless benefits surged to over 4 million. This is the highest in a quarter of a century. Conrad DeQuadros, senior economist at RDQ Economics in New York, said it was not just a deep recession but a long one.
Asia is no better than the US. With the economy dropped in the third quarter bigger than expected, Singapore confirmed it was in recession last Friday, and the economy could shrink further next year.
The South Korean won hit a nearly 11-year low Last Friday, down almost 40 percent this year. It is forecasted by UBS the economy could shrink 3 percent next year and its household spending dropped to a record low in the third quarter, showed by government data.
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