World News Brief, Wednesday May 26

Global markets fall and euro sinks amidst fears about Europe budgets and Korean tensions (+ analysis); Clinton piles pressure on China over North Korea; Thaksin Shinawatra wanted on terror charges; EU to introduce bank insurance levy; and more

Top of the Agenda: Global Markets Tumble over Europe, North Korea

Global stocks fell and the euro continued to decline Tuesday amid growing concerns about Europe's budget shortfalls (NYT). Markets in Europe were down at least 2.5 percent, and Spanish and Italian indexes were down nearly 4 percent. The Dow Jones industrial average fell 1.2 percent Monday; the S&P 500 index fell 1.3 percent; and Tokyo's Nikkei average fell 3.1 percent to its lowest close since November. Some analysts think the euro will slide to parity with the dollar. The EU's 1 trillion dollar financial bailout package and a bond-buying program by the European Central Bank mostly stopped spreading yields of eurozone government bonds. But interbank lending is under increasing pressure, and the euro has continued to weaken.

Political tensions between North and South Korea added to the market's downward spiral (WSJ).


In the Financial Times, Wolfgang Munchau writes, "Investors have good reason to treat the eurozone in the way they should have treated subprime CDOs."

In the Moscow Times, Daniel Gros says although the European Council created a task force to establish concrete proposals for reforming the monetary union, EU leaders can't answer the question of whether that framework will work, and so financial markets will continue to doubt the euro's long-term stability.

In this roundup, six experts discuss the potential impact of the eurozone's debt problems on the United States.


PACIFIC RIM: Clinton Pressures China on North Korea

US Secretary of State Hillary Clinton stepped up pressure on China (AP) to back international action against North Korea for the sinking of a South Korean warship, calling peace and security on the Korean peninsula "a shared responsibility" between Washington and Beijing.

The United States, South Korea, and Japan have displayed solidarity in response to ramped-up tensions with North Korea, but China needs to be more active in crisis diplomacy, says CFR's Sheila Smith.

Thailand: Thailand's criminal court approved an arrest warrant (NYT) on terrorism charges for the fugitive former prime minister Thaksin Shinawatra.



US Frustration Grows on Oil Spill
EU Plans Bank Levy to Prevent Failure


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