Bonuses under fire as governments struggle with crisis

9th February 2009, Comments 0 comments

Amid public anger against bankers seen as earning well despite the crisis, British PM is calling for "a new culture that rewards sustainable success."

London -- British Prime Minister Gordon Brown called time on the "bonus culture" for bankers on Monday as the economic crisis deepened further, with auto giant Nissan saying it will cut 20,000 jobs worldwide.

As American President Barack Obama warned of "catastrophe" without immediate action while the Senate debated his 800-billion-dollar (617-billion-euro) stimulus package, evidence of the worst downturn in decades is piling high.

France looks set to join Europe's other leading economies by entering a recession later this year with two quarters running of contraction. Germany, the world's leading exporter, reported a sharp drop in its trade surplus on flagging export performance.

South Africa's AngloPlatinum, the world's largest producer of the metal, said that it would shed 10,000 jobs this year because of lower prices and sagging demand from automakers, which use platinum for catalytic converters.

And amid public anger against bankers seen as earning well despite the crisis, Brown told a conference in London: "The old, short-term bonus culture is gone." He called for "a new culture that rewards sustainable success."

Echoing his words, Britain's Barclays bank said it would not pay bonuses to top directors this year, despite posting net profits for 2008.

The Confederation of British Industry, meanwhile, said one of its surveys found most British businesses felt the credit crunch was getting worse.

In France, newspaper reports said the state would lend 6 billion euros (7.7 billion dollars) to ailing carmakers Renault and Peugeot-Citroen in exchange for a promise to halt job losses and rein in executive bonuses.

And the International Labor Organization warned that only "swift and bold" action to protect workers and families could avert a "social recession" in Europe on the heels of the economic crisis.

Grim news abounded on the jobs front as the government in recession-hit Ireland said it would set aside extra money for relationship counseling to help stressed-out couples and families affected by the economic crisis.

"The difficult economic situation being experienced throughout the country is filtering into the lives and homes of families throughout Ireland," said Social and Family Affairs Minister Mary Hanafin. "Where a person loses their job or has their working hours cut back, this financial strain can lead to pressures in relationships."

The crisis also worsened in Japan, where auto giant Nissan forecast a net loss of 2.9 billion dollars and said it would cut 20,000 jobs worldwide.

"The global auto industry is in turmoil,” said the Japanese giant's chief executive, Carlos Ghosn. “Nissan is no exception."

Electronics company TDK Corp. became the latest Japanese company to report crumbling corporate results, posting a net loss in the nine months leading up to December.

Japan's economic woes, including a sharp slide in exports, are being replicated in Germany. Official data showed the trade surplus in the country fell 8.7 percent in 2008 from the previous year, as imports grew more than exports.

The Indian economy meanwhile, which grew by nine percent last year, was expected to slow to 7.1 percent in the current fiscal year, according to official estimates released Monday. It would be the slowest level since 2003.

In the United States, Obama is due to take his case for a huge economic rescue plan directly to the American public on Monday and the Senate is expected to vote on the bill later this week, following days of highly contentious debate.

Fears that the American package may be delayed by wrangling in Congress have impacted stock exchanges -- with Japanese share prices closing 1.33 percent lower.

Europe's main stock markets dipped at the start of the week's trading, with London's FTSE 100 index of leading shares down 0.17 percent at 4,284.51 points.

Frankfurt's DAX 30 declined 0.26 percent and in Paris, the CAC 40 fell 0.63 percent in early afternoon trading.

The dollar was mixed in European trading after the market digested grim US unemployment data that emphasized the economic challenges facing Obama.

World oil prices held steady after OPEC member Iraq predicted the cartel will announce further production cuts in a market struggling with weak demand.

New York's main oil futures contract, light sweet crude for delivery in March, rose seven cents to 40.24 dollars a barrel in afternoon Asian trade.

And in a sweet twist to the economic doom and gloom, Switzerland's national chocolate makers association reported record sales in 2008 for the fifth consecutive year after gains in Africa, Asia and the Middle East.


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