World News Brief, Friday August 13

Stocks in Asia and Europe follow US markets down on back of more bad economic news (+ analysis); Pakistan faces new floods threat; Iraq general warns military won't be able to secure country until 2020; Russia moves missiles into breakaway region; and more

Top of the Agenda: Markets Drop Amid Fears of Global Slowdown

Following steep declines (AP) Wednesday in US and European equities, Asian stocks slid modestly on growing doubts about global economic growth. The Dow Jones industrial average slumped 265 points, moving back into the red for the year. Market drops followed a spate of developments signaling a slowing economy (NYT) in the United States and abroad. On Tuesday, Federal Reserve officials warned that the pace of recovery in the United States had slowed. US trade data for June showed the largest gap since October 2008 at $49.9 billion (FT), indicating that the world's largest economy cannot rely on foreign trade to offset slowing. As stocks declined, investors rushed for safety in government debt like US Treasury securities, driving benchmark market interest rates to their lowest levels in more than a year. Economists predict the US economy may confront high unemployment (Bloomberg) and lackluster growth for some time.


Investment manager John C. Michaelson looks at the US Fed's policy of near zero interest rates and argues that lowering interest rates too much may not stimulate recovery (WSJ), but actually slow it.

Assessing the Fed's latest decision to use proceeds from its mortgage-bond portfolio to buy long-term Treasury securities, the New York Times says the Fed's options now are more limited than they were three years ago, and the consequences of its actions potentially more dangerous.


Read the full text of Fed statement here.


PACIFIC RIM: Rains Hamper China's Rescue Efforts

Heavy rain in northwest China is disrupting rescue efforts in Zhouqu County, which was hit by a landslide Sunday that killed more than 1,100 people. Hundreds more are still missing, with hopes of finding survivors fading (GlobalTimes). Meanwhile, as fears of disease outbreak rise, the state media reports that medical workers and specialists in epidemic prevention have been sent to the area.

Japan: Japan's finance minister warned against the yen's rise Thursday, threatening to take "appropriate action," an indirect reference to currency market intervention (WSJ). Yoshihiko Noda's remarks showed a heightened sense of caution among Japanese currency officials over the yen's recent rise to a fifteen-year high against the dollar.



- Iraqi General Warns on US Pullout
- New Flood Threat in Pakistan
- Russia Deploys Missiles in Abkhazia


This is an excerpt of the Daily News Brief. The full version is available on