Economic distress erupts on the streets

30th January 2009, Comments 0 comments

Economic fears gripping the middle classes amid waves of cut-backs and stagnant wages spilled over in France, while elsewhere the daily treadmill of layoff announcements and plunging profits rolled on.

PARIS -- Signs of global economic distress multiplied on Thursday, with more companies worldwide cutting profits and jobs, and protesters swarming the streets of France in anger at the worsening crisis.

Economic fears gripping the middle classes amid waves of cut-backs and stagnant wages spilled over in France, while elsewhere the daily treadmill of layoff announcements and plunging profits rolled on.

More than a million French public sector workers staged a massive strike on Thursday, many joining street marches as anger at the government's handling of the economic crisis erupted.

"The capitalist economy is sick," read one banner at a protest in the central city of Lyon. "Let's let it die."

Worldwide, there was some optimism over the prospects for the passage of a massive US stimulus package through Congress, but this was accompanied by further indications of the depth of the crisis worldwide.

Germany, Europe's biggest economy, announced on Thursday that its unemployment rate surged to 8.3 percent this month.

There was more dismal news on the labour front in Asia's largest economy. Japan's Nippon Sheet Glass Company said it will shed 5,800 jobs by 2010 and Toshiba announced plans to cut 4,500 jobs this year.

Other titans of Japanese industry also showed the strain. Sony Corporation warned it remained on course for its biggest ever loss in the year to March following a fall in demand for televisions, cameras and games consoles.

Even the video game maker Nintendo, which has enjoyed spectacular growth in earnings in recent years, cut its annual net profit forecast by a third.

Anglo-Dutch energy giant Royal Dutch Shell said it made a net loss of 2.81 billion dollars in the final quarter of 2008 as plunging oil prices, dragged down by falling demand, slashed the value of inventories.

And US auto maker Ford Motor Co. announced a quarterly loss of 5.9 billion dollars, a sharp widening of its losses as auto sales were slammed by the downturn around the world.

"Ford and the entire auto industry faced an extraordinary slowdown in all major global markets in the fourth quarter that clearly had an impact on our results," said Ford president and chief executive Alan Mulally.

There was some positive news in Europe, where the European Commission's economic sentiment indicator fell by less than analysts had expected in January although it reached to its lowest ever level.

Recent business and consumer surveys in Germany and France have also shown marginal improvements, fuelling hopes that the recession may have hit bottom.

Investors and analysts were meanwhile pinning hopes on President Barack Obama's 819-billion-dollar (627-billion-euro) plan to breathe life into the recession-strapped US economy.

The US House of Representatives approved the measure on Wednesday and the Senate will now vote on its own version of the bill before a final draft reconciling the two goes to Obama for signature.

"The progress through the House of Representatives of the package with a comfortable margin will be cheering US sentiment," said analyst James Hughes at CMC Markets in London.

"But certainly no one will be under the illusion that this is the turning point for the economy."

US stocks stumbled after government figures showed weaker than expected jobless claims and durable orders, and there were concerns over earnings of companies reeling from recession.

US new home sales also slid 14.7 percent in December to the lowest monthly level on record.

The Dow Jones Industrial Average shed 0.69 percent at the opening bell. The tech-heavy Nasdaq dropped 1.34 percent.

Europe's main stock markets fall sharply, dragged down by the banking sector, which ended a brief rally on profit-taking. In late deals, London fell 3.12 percent, Frankfurt dropped 2.44 percent and Paris was down 2.53 percent.

Asian markets had been lifted on Thursday by news of the US stimulus plan's progress. Hong Kong leapt 4.6 percent, while Tokyo added 1.79 percent and Sydney 0.9 percent.


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