World Crisis Online

TOKYO — Japan’s newly installed prime minister startled the nation on Friday by warning that it could face a financial crisis of Greek proportions if it does not tackle its colossal debt.

The stark words from the prime minister, Naoto Kan, followed by just hours the resignation of his banking minister and ally in the governing Democratic Party, Shizuka Kamei — an advocate of big spending. Mr. Kamei’s departure seemed to signal that the new government would focus on reducing Japan’s heavy government debt, called sovereign debt, by far the highest in the industrialized world, and cutting back on the wasteful public works projects.

“It is difficult to sustain a policy that relies too heavily on issuing debt,” Mr. Kan told the Japanese Parliament in his first policy speech. “As we have seen with the financial confusion in the European Community stemming from Greece, our finances could collapse if trust in national bonds is lost and growing national debt is left alone.”

Worried by the Greek debt crisis, policy makers around the world have increasingly raised the alarm over runaway government spending of the past two years, as the world has grappled with an economic crisis.

Indian Government Officials said that “we are keeping a close watch on the European debt crisis, though it has not seen any significant adverse impact on its economy”.

Indian Union Commerce Minister Anand Sharma said “We are keeping a very close watch on the situation (the European crisis). So far, there is no adverse impact of significant nature,”

Indian Union Commerce Minister Anand Sharma told reporters on the sidelines of a conference organised by the Tea Research Association of India.”I don’t foresee in the immediate context any major impact which would create an alarming situation here,” (continue reading…)

The Asian region had been largely insulated from the Global Financial Crisis (GFC) and would aggressively outperform other global economies in the medium term, financial experts at the inaugural In The Zone conference at The University of Western Australia said today.
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The U.S. financial meltdown has created a worldwide crisis. Ironically, worldwide scared money is still flowing into U.S. Treasury obligations as a safe haven. This permits more U.S. borrowing, but by drying up credit overseas creates financial crises in other countries.

I’ve been posting for several years on pieces of the origins of this financial crisis. Now Robert Weissman and others have attempted to put together an overall picture of what happened in Sold Out: How Wall Street and Washington Betrayed America, produced by Essential Information and the Consumer Education Foundation. (continue reading…)

Dutch manufacturers are climbing out of the deepest recession of the post-war period. This will lead to more industrial production in 2010. However, growth will remain sluggish for some time as consumers and companies remain cautious.

Economy and industry emerge from recession
As a cyclical and highly export-oriented sector the manufacturing industry has suffered badly from the international recession. Industry sustained the largest increase in the number of bankruptcies and the greatest decline in the volume of production of all business sectors in 2009. A record number of industrial concerns went out of business in the first half of 2009. The global downturn has bottomed out however. Producers and consumers are less pessimistic and world trade is picking up again. A number of industrialised countries emerged from recession in the second quarter. After five quarters of contraction, the Dutch economy expanded again in the third quarter, albeit slightly. (continue reading…)

ScienceDaily (Sep. 26, 2008) — Mahmoud El-Gamal, chair of Rice University’s economics department and Amy Myers Jaffe of Rice University’s Baker Institute are near completion of a forthcoming book, tentatively titled “Oil, Dollars, Debt and Crises.” The book closely examines the world financial marketplace. “It’s a book about the petrodollar and the worldwide financial system,” said El-Gamal.* (continue reading…)

The Chinese economy will grow by more than 8 percent in 2010, despite lingering uncertainties in the global market, a leading Chinese economist predicted.

Fan Gang, director of the China National Economic Research Institute and a member of the money policy committee of the People’s Bank of China, is confident that the country can meet its GDP growth target of 8 percent this year and will keep the momentum of the economic recovery next year.

He attributed the strong economic growth to the government stimulus package, rising investment in property and industrial sectors as well as a growing trade surplus.

China’s 4-trillion-yuan ($585 billion) stimulus package, mainly on domestic investment and consumption, is shoring up the economy, with manufacturing showing more signs of recovery, according to the State Council, or Chinese cabinet .

“Investment in real estate so far this year has almost fallen to its lowest level for years,” Fan said, “yet money has started to flow into this sector and will increase quickly next year, making it a significant source of GDP growth.” (continue reading…)

Regardless, as the imminent unwind occurs (not if – when), it is always the equity tranche that will take the first loss, despite the novel development of the creeping equitization concept for companies such as Citigroup (and soon Bank Of America) where dilution and value destruction of senior capital tranches is only voluntary because the administration deems it so – the loaded gun of total system collapse pointed at one’s temple can be a persuasive mechanism.