There are a number of ‘happenings’ or reports from across Europe
and Japan
A number of countries notably Luxembourg, Lichtenstein, Andorra and
Switzerland are bowing before a coming storm and relaxing their bank
secrecy laws. Then the Swiss have been selling their very ‘hard\
Francs and buying euros to ease the pressure on the Swis by this form
of devaluation.
In Eastern Europe Latvia’s new prime minister has said - according
to the Swedish Dagens Nyhete "Latvia is on the brink of bankruptcy".
Then I gove reports on two key countries in the global market place
both showing horrendous figures.
And Finally Cameron speaks out about the Tories role in the crisis so
far!
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TELEGRAPH 13.3.09
1.Japanese economy in worst shape since Second World War
New figures have revealed the Japanese economy shrank by 3.2pc in the
last three months of 2008, leaving the world's second-largest economy
in "dire" straits. Manufacturers have slashed production and jobs as
demand for goods evaporates at an unprecedented rate.
By Malcolm Moore in Shanghai
The Nikkei share index dropped 2.41pc to close at 7198.25 points
after official statistics confirmed the Japanese economy is in the
worst shape since the Second World War. On an annualised basis, the
economy was shrinking by 12.1pc in the final quarter.
"The fall in trade accounted for almost all of the decline," said
Julian Jessop, an economist at Capital Economics. A 13.8pc drop in
exports, coupled with a 3pc rise in imports, was responsible for 3
percentage points of the 3.2pc contraction.
He added that while exports were likely to take a further tumble in
the first quarter of 2009, imports are also now falling, which should
lower the deficit. Faced with an evaporation of demand for Japanese
goods, manufacturers are slashing production and jobs at an
unprecedented pace.
"The economy is in a dire situation," said Takeshi Minami, chief
economist at the Norinchukin Research Institute. "Japan and China
will not be able to pull out of the current doldrums unless the US
economy finds its feet again."
Most economists believe Japanese gross domestic product will keep
shrinking throughout the first half of 2009, although the fall will
be slightly smaller.
Seiji Adachi, an economist at Deutsche Securities, said he did not
expect Japan to bottom out until 2011. "We could be looking at three
straight years of contraction in GDP. Consumption is likely to weaken
as the jobs market is worsening and people are giving up looking for
work."
To boost the economy, the ruling Liberal Democratic Party said tax
cuts should be part of a stimulus package. "If we are to take further
tax steps, they should help boost demand," said Hiroyuki Sonoda,
deputy head of the party's policy research council.
In China, banks kept up the breakneck speed of new lending in
February, issuing 1.07 trillion yuan (£107bn) of loans, according to
the central bank. The sum was lower than January's lower 1.62
trillion yuan but still more five times the sum from last year and
more than expected.
In sharp contrast to the credit crunch in the rest of the world,
Chinese banks have plenty of liquidity and have been ordered by the
government to play a crucial role in rebuilding the economy.
However, a 3.8pc rise in industrial production in January and
February was the smallest rise since records began in 1994,
suggesting that the bank loans have yet to make a significant impact
on the overall health of China's manufacturing sector. In December,
industrial output rose 5.7pc.
The growth in retail sales also slowed, to 15pc from 19pc in
December, although the slowdown may have been the result of sales
around the Chinese New Year period. Nevertheless, it is more evidence
that Chinese consumers are unlikely to help rebalance the economy and
boost domestic demand in the short term.
Together with data earlier in the week showing a tumble in exports,
economists said the government's £400bn stimulus measures had not
seemed to have made an impact in the fortunes of private companies or
households.
=========
2. German industry is 'war zone' as recession causes export collapse
The German economy has plunged deeper into recession with a collapse
in industrial production, orders, profits and cutbacks by some of its
biggest employers.
By Roland Gribben
Output slumped 7.5pc in January – the biggest monthly slide since
reunification in 1991 – and a staggering 19.3pc lower than the same
month last year. Independent forecasters expect the economy to shrink
3.7pc this year although Berlin is sticking to its own prediction of
a 2.25pc fall.
Car-makers and component suppliers are bearing the brunt. After
announcing a 22pc slide in fourth-quarter profits last year,
Volkswagen said on Thursday it was facing one of the most difficult
years in its history.
Daimler Benz, the Mercedes car group, is laying off 18,000 staff at
four plants for "several months", BMW said it had dropped into the
red at operating level in the fourth quarter last year and tyre-maker
Continental is shedding at least 1,900 jobs. ThyssenKrupp has halted
work on four container ships because customers said banks had blocked
finance.
The bleak data and signs that the country's vaunted industrial
machine – Germany is the world's biggest exporter – has run out of
steam have sent shockwaves through the country. The news has added to
the pressure on Chancellor Angela Merkel to be bolder and increase
the €80bn (£74bn) reflation package designed to finance
infrastructure development, provide tax incentives and meet the cost
an "old for new" car-scrapping scheme to help stem the fall in
domestic vehicle sales.
Dominic Bryant, an economist with BNP Paribas told Bloomberg:
"Germany's industrial landscape now looks like a war zone –
completely obliterated. That is the price it is paying for being too
focused on exports and not stimulating enough internal demand."
Gerd Hassel, an analysts with BHF-Bank, said: "We are in a
depression. I wouldn't just talk about a recession any more."
German exports plummeted 20pc in January. With world trade continuing
to slow and key export markets weakening there are fears of further
falls. The collapse in the flow of orders for German factories has
been dramatic, down 35pc in the year to January. Manufacturing orders
alone slumped 38pc.
Volkswagen, now effectively controlled by Porsche, expects further
falls in sales and profits this year but finance director Hans Dieter
Poetsch, said the company was attempting to prepare for an upturn.
The group has placed a €3.5bn bond, the second biggest in its
history, to cover a large slice of its financing needs this year.
Contintental is closing two plants in Europe, one in northern Germany
and the other in northern France because of the loss of business.
============
BBC ONLINE 13.3.09
Cameron 'sorry' for debt mistakes

Mr Cameron says he would have done some things differently
David Cameron has apologised for mistakes his party made on the
economy, among them not warning about the extent of the UK's debt
crisis.
The Tory leader said he was "sorry" that he had got some things wrong
and that opposition politicians as well as ministers should admit
failings.
The Conservatives have called on Gordon Brown to apologise for policy
failures at home over debt and bank regulation.
- - - - - - - - - - - .
'Building trust'
Ahead of a speech in Birmingham, Mr Cameron said politicians needed
to admit past mistakes if they were to build public trust and lead
the economic recovery.
"I am sorry we have got some things wrong," he said.
"We were right to call time on government debt but should we have
said more about banking debt, corporate debt? Yes we should have done.
Saying sorry was the "easy bit", Mr Cameron said, adding that it was
more "difficult" for politicians to say where they had gone wrong.
"It's that that needs to take place in order to build trust with the
public so that we can get this economy out of recession and into
recovery," he said.
The Conservatives have been pressing the government to admit the
recession was not "imported from abroad" and that ministers allowed
debt levels to get out of control at home and failed to regulate
banks properly.
- - - - - - - - - - - - - -
For the first time, Mr Cameron has acknowledged shortcomings in the
Conservatives' own analysis of the economic situation.
He said the Tories could have done more to warn about excessive debt
levels in certain areas of the economy.
"Do I believe we did enough to warn about the rising levels of
corporate debt, banking debt and borrowing from abroad? No," he will
tell the Birmingham Chamber of Commerce later.
"And there are other areas of economic policy where I look back now
and think we would have done it differently if we had the time
again," he will go on to say.
"For example, while we warned that it was wrong and complacent to
claim that boom had been abolished..we based our plans on the hope
that economic growth would continue."
'Ineffectiveness'
The Conservatives should have made the case that the UK economy was
"broken" much earlier, Mr Cameron will add.
BBC political correspondent Carole Walker said Mr Cameron would
acknowledge failings by previous Conservative governments by saying
some "fundamental" weaknesses in the economy pre-dated Labour's
period in office.
Mr Cameron will claim Gordon Brown is unable to make the "clean break
with the past" needed, as he is in denial about the nature of the
problems facing the economy.
"He believes none of Britain's problems are home-grown. He thinks
that a fundamentally sound economy has been hit by an external
financial juggernaut, that Britain is just the innocent victim of a
banking crisis that "came from America"," he will say.
None of the government schemes announced recently to free up credit
or help struggling industries had come into force, highlighting what
Mr Cameron will call Labour's "scandal of inaction".
"The hallmarks of this government are hyperactivity and
ineffectiveness,
"When it comes to the vital task of restoring confidence that's about
the worse combination there is."
On Thursday, Business Secretary Lord Mandelson expressed concerns
that an initiative to supply credit to finance car purchases had yet
to get off the ground.
The Conservatives say his intervention exposed internal divisions
within government although officials said it was "perfectly
reasonable" for him to stand up for the interests of business.
Ministers are preparing for the G20 summit of leading economies in
London next month which they hope will agree reforms to bank
regulation and measures to boost economic demand.
Friday, 13 March 2009
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