EU debt fears grow despite new promises and British and German cuts (+ analysis); New Japanese Prime Minister names cabinet; Spanish workers protest wage cuts; Ahmadinejad on his way to China; and more
Top of the Agenda: EU Sovereign Debt Fears Continue
Concern over the eurozone's sovereign debt continued to escalate (WSJ), even as EU officials have tried to allay fears by agreeing to monitor national budgets more closely and impose sanctions on excessive budgets. The measures would allow the EU more control over budgets' structures, earlier sanctions for countries headed for fiscal problems, and more scrutiny of countries' total debt, rather than just their budget deficits. Analysts worried about the negative impact of budget cuts on euro-area growth, as well as negative comments by rating agency Fitch about Britain's fiscal woes.
Fitch said Britain needed more severe budget cuts (FT) than what its April 2010 budget set out, precipitating a decline in the pound's value by 0.5 percent against the dollar and the euro.
The comments followed British Prime Minister David Cameron's announcement that the country's finances were "worse than we thought," as he laid the groundwork (WashPost) for spending cuts and policy changes to be detailed later this month. Germany, meanwhile, announced an $80 billion, multiyear package of cuts that would trim fifteen thousand public-sector workers.
In the Times of London, the Hudson Institute's Irwin Stelzer says the market worries are "all reasonable, but all a bit overblown." The more likely outlook is for a continued recovery fueled by low interest rates and a new stimulus bill, though the pace of growth is uncertain.
In the Financial Times, Jeffrey Sachs says Keynesian economics is on its way out, in the wake of global stimulus packages that have not worked and have merely exacerbated over-borrowing.
PACIFIC RIM: Japan's New PM Unveils Cabinet
Newly minted Japanese Prime Minister Naoto Kan named a new cabinet (NYT) aimed at tackling the country's political and economic problems and breaking with the financial scandals of his predecessor.
Listen to CFR Senior Fellow Sheila Smith discuss the implications of the surprise collapse of former prime minister Yukio Hatoyama's government.
China: Japan's Honda Motors was hit by another strike (WSJ) in southern China at an affiliated parts company, as more of the region's workershope to secure wage increases.
This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org