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WORLD> America
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No relief seen in global economic crisis
(Agencies)
Updated: 2008-11-21 10:29 WASHINGTON --The global economy saw more signs of distress on Thursday with US stocks plunging for a second consecutive day, oil prices falling, a surprise rate cut in Switzerland, export woes in Japan and rescue loans to Turkey and Iceland.
Wall Street was hostage to the rapidly changing news of a possible rescue for the US auto industry, with the stock market rising on news of a tentative bipartisan deal in Congress for a $25 billion package for Detroit and then falling to new lows when the deal ran into trouble. Automakers held out hope. After the end of the trading day, the White House announced it could back a compromise plan pushed by Michigan senators to help by using $25 billion in Energy Department loans for greener cars, and urged Congress to act quickly. US automakers said they will meet Democratic demands to offer a plan to return to profitability, and lawmakers said it could be considered the week of December 8. In more bad news for the battered US economy, the number of US workers on jobless rolls surged to the highest in a quarter century, prompting Congress to extend benefits for the long-term unemployed. Oil prices plummeted below $50 a barrel for the first time since 2005 as investors anticipate a long global recession will slash demand. "I think this is going to be not only a deep recession, at least in the next couple of quarters, but also a long recession," said Conrad DeQuadros, senior economist at RDQ Economics in New York. All three major US stock indexes made broad swings, ending sharply lower due to deepening economic fears and investors' flight from risk. The Standard & Poor's 500 slid 6.71 percent to close at 752.44, its lowest since 1997. The Dow Jones industrial average slid 5.6 percent to close at 7,552.29 and the Nasdaq Composite Index fell 5 percent to end at 1,316.12. World stocks tumbled to 5-1/2-year lows with volatile emerging market equities down 5.16 percent. An index of European shares fell 3.8 percent and Japanese stocks plunged nearly 7 percent. Investors sought shelter in safe assets such as US Treasury bonds, and the US dollar slumped versus the yen, but both rose against the euro. The dramatic slowdown in the world economy prompted Switzerland's central bank to make a surprising interest-rate cut of 1 full percentage point, its third in six weeks and the largest since it adopted its current system in 2000. Analysts said the weak US labor market almost guaranteed that the Federal Reserve will cut its benchmark rate from the current 1 percent at its next meeting on December 15-16. Despite reports that Saudi Prince Alwaleed bin Talal planned to boost his stake in Citigroup back to 5 percent, the US financial services giant's stock fell 26 percent to 1994 levels due to serious concern about its very survival. "How many times is one going to take a beating before realizing the market isn't going to bounce?" said Andrew Kanaly, chairman of Kanaly Trust Company in Houston. "The decline in the oil prices is a barometer of more economic sliding globally." In what would normally be a good sign for consumers but now signals weaker global growth, US crude futures plunged 9.5 percent, falling as low as $48.50 a barrel to a 3-1/2 year low on expectations that a stalling economy would mean falling demand. |
