Stockmarkets fall across Europe, Asia and US; Chinese unemployment rates look "grim"; Peru concludes FTA with China; EU shifts policy on farm subsidies; and more
Top of the Agenda: New Fears, Markets Tumble
Stocks across Europe and Asia fell sharply today after the Dow Jones Industrial Average plunged 5 percent yesterday, closing at its lowest level in more than five years. The leading indices in Tokyo and Seoul both lost nearly 7 percent (WSJ) of their value, and Singapore, Hong Kong, and Australia all suffered significant losses. In early trading, European shares fell as well (MarketWatch).
The selloff came as consumer price data sparked new fears about deflation emerging in the United States and possibly other developed economies as well. In response, the U.S. Federal Reserve vowed it would do everything in its power to forestall deflation, including further interest rate cuts of as much as 50 basis points in December (FT). That would drop rates to 0.5 percent, their lowest level in history.
The Washington Post reports a series of indicators, from consumer prices to new home starts, now point to a serious recession in the year--and potentially years--to come.
Meanwhile, Iceland secured a $5.1 billion bailout loan (FT) including $2.1 billion from the International Monetary Fund and direct loans from Denmark, Finland, Norway, Sweden, Russia, Poland, and the Faroe Islands.
- A new interactive timeline from CFR.org traces the current crisis to its immediate origins in 2006, when U.S. housing prices began to fall.
Pacific Rim: China Employment Fears
Beijing conceded that its employment outlook is increasingly "grim" (BBC), following a government move to block mass layoffs. Analysts fear rising unemployment could lead to social unrest in the country.
China-Peru: China and Peru concluded talks (Xinhua) on a free trade agreement following meetings between Chinese President Hu Jintao and his Peruvian counterpart, Alan Garcia.
South Korea: The Korea Times looks at what deflation at home and abroad might mean for the South Korean economy.