Governments scramble to fight recession as job losses mount

28th January 2009, Comments 0 comments

The world's biggest economy shed 2.5 million jobs last year amid the global financial crisis and seven major corporations announced thousands of job cuts Monday.

Washington -- Governments around the world stepped up efforts Tuesday to rescue their faltering economies and shore up manufacturers amid the worst financial crisis in decades.

US President Barack Obama urgently sought support from opposition Republican lawmakers for an 825 billion dollar economic stimulus plan and Germany's cabinet sealed a 50 billion euro (66 billion dollar) lifeline to haul Europe's biggest economy out of recession.

The measures are Germany's largest stimulus plan since World War II.

Obama urged Republicans to "put politics aside" and stressed the urgency of passing his economic stimulus plan as he held high-stakes meetings on Capitol Hill.

"The main message I have is that the statistics every day underscore the urgency of the economic situation," he told reporters, a week after taking office. "The American people expect action."

The world's biggest economy shed 2.5 million jobs last year amid the global financial crisis and seven major corporations announced thousands of job cuts Monday.

More layoffs were announced Tuesday, with US glass maker Corning slashing 4,900 jobs and Japanese electronics maker NEC Tokin 9,450, citing "stagnant demand following the global slowdown."

The financial crisis, which intensified last September with the collapse of US investment bank Lehman Brothers, continued to haunt big financial firms.

Japan's top securities company Nomura reported a record 3.8-billion-dollar quarterly loss Tuesday, blaming the financial meltdown and the cost of buying chunks of Lehman Brothers.

Japanese financial firms are believed to be less exposed than many Western banks to US-linked losses but have been hit hard by weak markets and Japan's first recession in seven years.

Asian authorities moved to stop the rot, with the Japanese government planning to inject 1.5 trillion yen (17 billion dollars) into ailing companies.

India's central bank reduced its growth forecast for Asia's third-largest economy due to the deepening worldwide recession as it held leading interest rates at historic lows.

The US Senate confirmation late Monday of Obama's nominee for treasury secretary, Timothy Geithner, eased market concerns about the leadership of the government's rescue efforts.

Geithner, who as New York Federal Reserve chief helped his predecessor Henry Paulson craft the Treasury's 700-billion-dollar Troubled Asset Relief Program rescue plan, ordered new rules Tuesday to curb the influence of lobbyists from companies receiving TARP aid.

Also in Washington, Federal Reserve policymakers opened a two-day meeting in search of new tools to stimulate lending and revive an economy that has failed to respond to its zero-interest rate policy.

A closely watched Conference Board survey showed confidence among US consumers unexpectedly fell in January to the lowest level since the survey began in 1967, a troubling sign for consumer spending which drives two-thirds of US economic activity.

Business and banking executives warned at the Global Competitiveness Conference in Riyadh of worse times ahead for the global economy and urged greater efforts by the US government to turn its economy around.

Leveraged buyout king Henry Kravis called on Washington to move fast as the economy continued to deteriorate, and said Obama's 825 billion dollar package "may not be enough."

"The patient is in the critical care ward," said Kravis, founding partner of the private equity group Kohlberg Kravis Roberts.

The mainly private-sector speakers in Riyadh had a message of near-universal gloom for heads of state and government who are arriving in Davos, Switzerland, for the annual World Economic Forum that opens Wednesday.

Meanwhile, the Institute of International Finance projected private capital flows to emerging markets would tumble by more than 60 percent this year, with central and eastern Europe to be the hardest hit.

There were also further danger signs for the auto industry, a major casualty of the downturn. Honda said it would roll back production further in Japan and North America while Audi announced a temporary stoppage at a plant in Hungary.

Britain unveiled a 2.3-billion-pound (2.5-billion-euro, 3.2-billion-dollar) support package.

"The automotive industry with its more than one million employees ... is at the front line of the downturn with output falling faster and further than any other sector," Britain's Business Secretary Peter Mandelson told the upper House of Lords.


0 Comments To This Article