Financial Crisis Watch 15 april 2009

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  • 1. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.CONTENTSFOREWORD BY CES HEAD OF RESEARCHFINANCIAL CRISIS: ACTIONS TAKEN BY EU MEMBER STATESFINANCIAL CRISIS: ACTIONS TAKEN WORLDWIDEHIGHLIGHTSOUR COMPETITORS’ VIEWS ON THE FINANCIAL CRISISUPCOMING EVENTSANNEX www.thinkingeurope.eu
  • 2. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks. “WATCHTOWER” Foreword by CES Head of Research A Long, Hot Summer? Compared to the expectations of the organizers, the protests around the G-20 summit in Londonwere a disappointment. There was no such thing as a popular uprising against capitalism. The samecan be said – so far – of France where trade unions and leftist groups have already organised generalstrikes and are certainly likely to repeat this in future, as the effects of the crisis deepen. Certainneighborhoods of Berlin will probably see the most violent Mayday riots in their history. And inparticularly crisis-stricken Central European countries like Latvia and Hungary, protests have become apolitical factor. Greece had its fair share of ritualized riots by now, which are partly connected to thecrisis. But as much as these protests are part and parcel of the crisis we are in, we can nevertheless safelypredict that they either peter out in the second half of 2009, as recovery comes closer, or intensify –which will certainly not be liked by the majority of the population in the member states of the EU. Inother words, more numerous – and more violent – riots will not necessarily mean a weakening ofpeople’s support for the incumbent government (in most cases in the EU, centre right). People may beafraid of losing their jobs or part of their salaries. But they are at least equally afraid of someonefirebombing their car, or through strikes, blockades, “boss-napping” or whatever, deepening the crisisand slowing down the arrival of recovery. But the mindless destruction caused by what in most EU member states are tiny radical minorities,points to a larger, and even more political fact: the belief that there is any fundamental alternative tothe market economy, is – EU-wide - really limited to a small group of people. Which is why, in opinionpolls so far, the European Left has been so singularly unable to profit substantially from the crisis. Andthis concerns not only the radical, anti-globalist Left, as in Germany’s Die Linke or France’sAnticapitalist Party. It also concerns Social democrats and Socialists who still fail to see their pollresults rise as dramatically as expected in autumn 2008. We may be, and indeed should be, talkingabout more efficient controls in our financial system, or more ethical behavior of bankers. www.thinkingeurope.eu
  • 3. Centre For European Studies FINANCIAL CRISIS WATCHEarly warning mechanisms will have to improve, together with transparency and accountability in anykind of investment. But these are no “game changers” in the global quest for the politico-economicsystem that fits the people best. That is why the democratically capitalist West, with its many systemic shades inside, and even itsvisible shortcomings, is not even remotely in the same situation as communism in 1989. In 1989, thepeople of Central and Eastern Europe were perfectly well aware that a full-blown alternative existedto their own crumbling politico-economic system called state socialism. It was right next door, so tospeak, and many of them had actually seen it work. They wanted that system, and then get on withtheir own lives. In that, they were successful to a degree no one could have suspected back then. But2009 is not the end of Western democratic capitalism, or even the beginning of its unravelling. On the20th anniversary of 1989, it is worth remembering that. When the recovery begins to take hold, the challenges won’t go away. Inflation looms, many willstill be out of a job and/or much poorer than today, and it will be exceedingly hard to get rid of thestaggering budget deficits and our addiction to subsidies and state intervention we are just nowdeveloping. But those are the political battles of another day. For the moment, we should focus on thetask at hand – getting to recovery. And maybe enjoying the summer a little. www.thinkingeurope.eu
  • 4. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.FINANCIAL CRISIS: ACTIONS TAKEN BY EU MEMBER STATESAustriaThe global economic downturn has taken a major effect on Austria’s external trade sector, as exportsdropped by 25.2 percent in January year-on-year, according to official data released on April 3. Exportsamounted to 7.2 billion euro, while imports fell by 17.7 percent to 7.8 billion euro. (12/04/2009)Austrian exports plummet in January (New Europe)BelgiumFortis Bank, the former Belgian banking arm of stricken financial group Fortis, reported a loss of 20.6billion euro (27.5 billion dollars) for 2008 owing to the groups break-up and losses on toxic assets. Thebulk of the loss, which was roughly in line with a previous estimate, came from the "negative impact of12.5 billion euro" relating to the parent companys carve-up by the Dutch, Belgian and Luxembourgstate. As part of a bailout of the group, the Belgian state took over Fortis Bank and is now in theprocess of selling a 75 percent stake to French banking group BNP Paribas. (14/04/2009)Fortis Bank Belgium posts EUR 20.6bn loss for 2008 (EUbusiness)Fiat staff in Brussels closeted local managers inside their office for several hours in another apparent"boss-napping" linked to worker anger over job cuts in Europe. The dispute centered on failednegotiations over 24 planned redundancies at a sales and repair office in the Schaerbeek suburb.(09/04/2009)Fiat bosses held by Belgian workers in jobs dispute (Reuters)BulgariaThe latest report of the Italian banking group Unicredit states that Bulgaria is inevitably going toundergo a two-year recession. According to the report, cited by the Pari Daily, Unicredit, which is theowner of the Bulgarian Bulbank, expects that the Bulgarian economy will shrink by 3 percent in 2009and by 1 percent in 2010. (10/04/2009)Unicredit: Bulgaria destined for economic apocalypse (Sofia Novinite)The US Secretary of Commerce, Gary Locke, has congratulated Bulgarian Foreign Minister Kalfin onBulgarias stable economy and banking system. Gary Locke also congratulated Minister Kalfin in hisrole as Deputy Prime Minister in charge of the economy, for the countrys substantial foreign currencyreserves, which served as a stability factor amidst the global financial crisis. (10/04/2009),,,,,,,,,,,,,,,,,,,,,US Secretary of Commerce praises Bulgarias economic stability (Sofia Novinite)The Manager of KIA Motors Bulgaria, Hrabrin Ivanchev, has predicted an overall decline of 30 percentof new car sales in Bulgaria in 2009. (08/04/2009)………………………… ………………………………………………….Expert predicts 30 percent drop in Bulgaria new car sales (Sofia Novinite) www.thinkingeurope.eu
  • 5. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.The Manager of KIA Motors Bulgaria, Hrabrin Ivanchev, has predicted an overall decline of 30 percentof new car sales in Bulgaria in 2009. (08/04/2009)………………………… ………………………………………………….Expert predicts 30 percent drop in Bulgaria new car sales (Sofia Novinite)Czech RepublicThe ongoing global economic crunch is set to bite deep into the pay packets of the Czech executives.Referring to revelation made by a recent survey conducted by the Economic Chamber, local reportssaid that teo-fifths of Czech firms would be cutting bonuses to their chief executives, and a fifth ofbusinesses would reduce their managers’ pay. (12/04/2009)Two-fifths of firms to cut bonuses to managers (New Europe)EstoniaIn a recent meeting between the Estonian and Latvian Prime Ministers, the two noted that regardlessof the current economic crisis, Estonia’s aim is to adopt the euro as fast as possible. Estonian PrimeMinister Andrus Ansip said the challenges will lie in fulfilling the budget criterion. (14/04/2009)………..Estonia sets euro aims high (The Baltic Times)Estonian Prime Minister Andrus Ansip has said that the country’s Unemployment Fund is on the vergeof bankruptcy as it struggles to make payments amid a climbing joblessness rate. “If nothing ischanged then practically all Unemployment Fund’s reserves will be spent this year. There will be only80 million kroons left of the current 2.7 billion kroons,” Ansip said. (02/04/2009)....................................Unemployment board on the verge of bankruptcy (The Baltic Times)FrancePresident Nicolas Sarkozy pledged €1.5bn ($1.9bn, £1.3bn) on 10 April for a social investment fund forunemployment and training in an attempt to build support from unions and employers as concernsmount over growing militancy in industrial protests. The French President met union leaders andemployer representatives to announce the new fund, which will be jointly managed by the state andFrance’s social partners. He challenged unions and employers to match the government’s funding.(10/04/2009)Sarkozy pledges €1.5bn to help jobless (Financial Times)GermanyFinance Minister Peer Steinbrueck said in an interview published on 12 April that he has devised amaster plan to help struggling German banks but said he still opposed creating a single "bad bank" forproblem loans. Creating a bad bank would be the most radical move taken by a big economy to try toovercome the global financial crisis, which began when a collapse in property prices snowballed into alending freeze. (14/04/2009)…………………………………………………………………………………………………………………Germany finance minister to unveil bad banks plan (EurActiv) www.thinkingeurope.eu
  • 6. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.Shares in General Motors slumped more than 17 percent in Frankfurt amid growing concern theautomaker might file for bankruptcy. The New York Times reported late on 12 April that the U.S.Treasury Department was directing GM to lay the groundwork for a bankruptcy filing should it fail toreach give-back deals with stakeholders by the deadline set by the Obama administration.(14/04/2009)GM tumbles in Germany amid bankruptcy fears (CNBC)The world could face high inflation and a “crisis after the crisis” when the global economy recovers,Peer Steinbrück, German finance minister, has warned. The comments are the latest sign of concernfrom Germany at the extra-loose monetary policies conducted by central banks around the world andthe ever-larger fiscal stimuli being unveiled by governments. “I am concerned that thecountermeasures we are seeing around the world, financed by enormous amounts of debts, could bepaving the road to the next crisis,” Mr Steinbrück said. (12/04/2009)…………………………………………………….Germany warns on ‘crisis after crisis’ (Financial Times)GreeceThe Greek tourist industry faces a grim summer, with bookings down by 25 to 30 per cent asrecessions deepen in Germany and the UK, Greece’s main tourist markets. Dozens of four-star andfive-star hotels in Crete, Rhodes and Corfu, the most popular islands, decided against opening forEaster, the traditional start of the season, in an attempt to keep down costs. (13/04/2009)dddddddddGreek tourism faces summer drought (Financial Times)HungaryHungarys incoming Prime Minister Gordon Bajnai has promised to tackle his countrys economic crisishead-on, but he has little time and takes over an economy expected to contract 6 percent this yearand is kept afloat by a $25.1 billion IMF-led lifeline. (14/04/2009)ccccccccccccccvvvvvvvvvvHungarys new PM takes over a nation in crisis (EurActiv)Hungary, struggling in the global slump, met the public deficit limit required to join the eurozone lastyear and expects to do so again in 2009, Finance Minister Janos Veres said. "Last year, Hungaryspublic deficit was 3.4 percent (of gross domestic product), but taking out the costs of Hungaryspension reform, the public deficit is 2.8 percent (of GDP), under the three percent target," he said.(01/04/2009)Hungary says it meets EU deficit limit in 2008 (EUbusiness) www.thinkingeurope.eu
  • 7. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.IrelandHundreds of Irish rugby fans who were due to travel to London for a crucial European cup tie havereturned their tickets in a sign of how Ireland’s biting recession is hitting middle class professionals.The lengthening dole queues and the grounded helicopters of Ireland’s bankrupt property developersmay be the common leitmotif for Ireland’s current economic plight. (10/04/2009)………………………………Ireland’s budget infuriates middle class (Financial Times)The Irish government has announced plans to establish a bad bank in a bid to quarantine toxic assetsand restore confidence in its ailing financial system. The move comes as part of a tough emergencybudget, and makes Ireland the first EU member state to adopt such a strategy to deal with the creditcrisis. Finance Minister Brian Lenihan said the move would give Irish banks a "clean bill of health" andget credit flowing to individuals and businesses in the real economy. (08/04/2009),,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,Ireland to set up Europes first bad bank (EurActiv)The Irish Republic has unveiled its second budget in six months to deal with its rapidly contractingeconomy. The emergency budget includes a large rise in taxes and a cut in spending, to deal withIrelands budget deficit. Finance Minister Brian Lenihan also said an independent agency would takeover banks bad assets to try and restore lending. (07/04/2009)nnnnnnnnnnnnnnnnnnnnnnnnnnnnnnIreland unveils emergency budget (BBC)LatviaLatvia’s unemployment rate is continuing to skyrocket, sparking widespread concern among politiciansand workers. Latvian Welfare Minister Uldis Augulis said that according to the latest information theregistered unemployment is 10.4 percent, a total of 113,000 members of the workforce. About 16percent of the total includes people 20-24 years old, many of whom were laid off after theconstruction industry slowed down. (08/04/2009)……………………………………………………………………………Unemployment continues to rise (The Baltic Times)A 200 million euro (265 million dollar) loan payment from the International Monetary Fund (IMF) toLatvia has been delayed because it failed to amend its budget, Latvias prime minister said. "The nextbig payment is due from the European Commission and that is about one billion euros," he said.(02/04/2009)Latvia suffers delay of IMF loan (EUbusiness)LithuaniaPrime Minister Kubilius said he welcomed the idea of fast-track euro adoption, after the FinancialTimes brought a report to light in which the International Monetary Fund urged the EU to allow CEEcountries to adopt the euro without the benefits of full membership in the eurozone. (08/04/2009)Euro fast track interests PM (The Baltic Times) www.thinkingeurope.eu
  • 8. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.Crisis-hit Lithuania failed to keep below an EU-set public deficit limit last year, the governmentannounced, failing a key test as the country bids to join the eurozone. Finance Minister AlgirdasSemeta told reporters that the 2008 public deficit was 3.2 percent of gross domestic product.(01/04/2009)Lithuanias 2008 deficit breached EU limit (EUbusiness)LuxembourgLuxembourg, Switzerland and Liechtenstein blasted a G20 offensive against tax havens, regrettingtheir inclusion on an international "grey" list of offshore financial centres. "I think that the treatmentgiven to some countries is a bit incomprehensible," Luxembourg Prime Minister Jean-Claude Junckertold journalists as he arrived to chair a meeting of eurozone finance ministers in Prague. (03/04/2009)Luxembourg, Switzerland blast G20 tax haven offensive (EUbusiness)MaltaProvisional data for international trade show that the visible trade gap in February 2009 stood at 87.2million euro, down by 14.7 million euro compared to the same month last year. There was a decreasein imports of 76.2 million euro and a decrease in exports of 61.5 million euro. (12/04/2009)Trade gap shrinks 14.7 percent to 87.2 million euro (New Europe)The NetherlandsDutch electronics giant Philips has announced it lost 57 million euros in the first quarter of 2009, inline with forecasts. Philips CEO said the company had witnessed a "significant further deterioration"of its markets during the quarter. (14/04/2009)Philips lost 57 million euros in first quarter (France24)Dutch ING plans to sell operations worth up to 8 billion euros ($10.6 billion) to reduce risk, focus itsbank on Europe, and manage its banking and insurance separately, boosting its shares. ING, which wasloss-making in 2008 and received a 10 billion euro injection from the Dutch state last October, said in astatement it wants to shed non-core activities worth 6 billion to 8 billion euros, or 10 to 15 businesses.(09/04/2009)ING to shed up to $10.6 billion of assets (Reuters)The European Commission said it had launched an in-depth probe into the Dutch states bailout ofFortis Bank Nederland last year on concerns the deal may have broken state aid rules. Theinvestigation covers the states takeover of the Dutch banking arm of stricken financial services groupFortis last October and loans to it which the commission said amounted to "tens of billions of euros."(08/04/2009)EU opens in-depth state-aid probe into Fortis Dutch bank (EUbusiness) www.thinkingeurope.eu
  • 9. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.PolandPoland became the second country to seek access to a new credit line from the IMF for stronglyperforming economies to buttress them against the global economic crisis. Prime Minister DonaldTusk announced in Warsaw that the country was interested in a one-year precautionary arrangementunder the IMF’s Flexible Credit Line (FCL) for $20.5 billion. (14/04/2009)vvvvvvvvvvvvvvvvvvvvvvvvvvvPoland seeks $20.5 billion credit line from IMF (International Monetary Fund)Thousands of Polish migrants are applying for welfare benefits as the recession wipes away the jobsthat lured them to the UK, the Financial Times has learnt. Employment and benefits advisers arereporting a surge in the number of Polish people coming to them for help. That suggests many Polesare determined to ride out the economic downturn in the UK even though anecdotal reports suggestthousands of central European workers are returning home. (12/04/2009)//////////////////////////////Poles seek UK benefits as downturn bites (Financial Times)PortugalIn February 2009 the seasonally adjusted index for retail trade turnover at constant prices registered ayear-on-year growth rate of -4.8 percent. Employment and wages and salaries presented year-on-yeargrowth rates of 0.2 percent and 3.8 percent, respectively. (12/04/2009)Negative year-on-year rate in retail trade (New Europe)RomaniaThe International Monetary Fund has approved in principle the agreement with Romania for a massivebailout loan to deal with the effects of the global crisis. This has been announced by Romanias PrimeMinister, Emil Boc, who has also said the formal IMF reply was expected by April 14-15. Thus, in aspecial session on Saturday, April 11, the Romanian cabinet will meet to approve an EmergencyOrdinance on budget readjustment and revision so that the IMF board could discuss the bailout loanfor Romania on May 4. (10/04/2009)IMF approves in principle bailout loan to Romania (Sofia Novinite)SlovakiaIn revised GDP figures released on April 7, the National Bank of Slovakia (NBS) said that Slovakia’seconomy would contract by 2.4 percent in 2009. The bank attributes its 4.5 percentage-point revisionentirely to the global economic downturn and says the country’s economy should resume growing in2010, when GDP is forecast to increase by 2 percent, with growth accelerating to 3.2 percent in 2011.The central bank predicts that the unemployment will reach 11 or 12 percent. (13/04/2009)NBS: Slovakia is headed for its first recession (Slovak Spectator) www.thinkingeurope.eu
  • 10. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinksSloveniaSlovenias government on 9 April urged the former chief executive of the countrys largest bank, NLB,to return a one-million-euro (1.3-million-dollar) bonus and announced a new law to limit executivewages. "The government, as the legal representative of the largest shareholder in the bank, will use allthe means available to make the former CEO return the bonus," Finance Minister Franc Krizanic toldjournalists, citing the current economic crisis. (10/04/2009)……vv………………………………………………………….Slovenia urges executive to give back EUR 1 million bonus (EUbusiness)SwedenSwedens annual inflation rate plunged to 0.2 percent in March from 0.9 percent in February, due tolow interest rates for home owners and price cuts on electricity, the countrys statistics agency said.Statistics Sweden said more expensive food, transportation, rent and cultural activities counteractedthe drop somewhat. Consumer prices rose by 0.3 percent between February and March, mainly due tohigher fuel prices. (14/04/2009)ddddddddddddddddddddddddddddddddddddddddddddddddddddddSwedish inflation drops to 0.2 pct in March (CNBC)Swedens government said it would extend for six months a plan worth 1.5 trillion kronor (138.5 billioneuro, 183.8 billion dollars) aimed at helping banks under pressure from the global credit crunch.Sweden at the end of October presented its vast bank guarantee programme aimed at helping banksand financial institutions with liquidity problems secure needed loans. The plan was originally set toexpire on April 30, but the deadline would now be extended through October 31 this year with thepossibility of further extension if deemed necessary. (02/04/2009),,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,Sweden extends 139-billion-euro bank rescue plan (EUbusiness)UnitedcKingdomBritish media reported that British Telecom will cut another 10,000 jobs in coming months to reducecosts. BT calls the number "speculative". Preliminary results out next month are likely to be amongBTs worst since its 1984 privatisation. (12/04/2009)mmmmmmmmmmmmmmmmmmmmmmmmmMedia reports say BT to slash 10,000 jobs (France24)Britain’s banks will provide an extra £50bn of lending this year, Prime Minister Gordon Brown said.Other banks would follow Royal Bank of Scotland, Lloyds and Northern Rock – all of which are partly orfully nationalised – in committing to bolster lending, Mr Brown said. RBS, Lloyds and Northern Rockhave committed to an extra £44bn in lending but this has been offset by a fall in loans by foreign banksin the UK – notably Icelandic and Irish institutions. (08/04/2009)nnnnnnnnnnnnnnnnnnnnnfffffffffffffffPM predicts £50bn lending rise (Financial Times) www.thinkingeurope.eu
  • 11. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.FINANCIAL CRISIS: ACTIONS TAKEN WORLDWIDEAsiaLeaders of the key countries of Asia and the Pacific are preparing to meet in the Thai resort town ofPattaya to look at ways they can contribute to a new post-crisis global financial architecture. KornChatikavanij, Thailand’s finance minister, will submit an early draft of a plan to create an infrastructurefund for the Association of South East Asian Nations (ASEAN), which Thailand currently chairs.(09/04/2009)Asian leaders prepare for Pattaya summit (Financial Times)ChinaChina has unveiled plans to establish a $10bn (£6.8bn) investment fund for south-east Asian countries.It has also offered credit of $15bn to ASEAN. Chinese Prime Minister Wen Jiabao had planned toannounce the fund at the cancelled ASEAN summit. (13/04/2009)ddddddddddddddddddddddddddddChina offers funds to boost Asean (BBC)China is planning a new economic stimulus package targeted at boosting consumption. Thegovernment will also continue to bolster the economy using fiscal policies Gao Huiqing, head of theEconomic Forecast & Development Strategy department of the governmental think tank, said.(12/04/2009)China plans more stimulus to boost consumption (Reuters)China’s central bank warned it planned to “strictly control” credit to some sectors of the economyafter the country recorded a record surge in bank loans and money supply in March. The centralbank’s statement, made after a routine quarterly monetary policy meeting, followed the release on 11April of the money supply data. The data appeared to confirm that Beijing’s stimulus measures arerevitalising the domestic economy but raised credit risk and inflation concerns. (12/04/2009)Beijing to tighten controls on credit (Financial Times)Vehicle sales in China, the world’s largest car market, climbed to a record in March, extending gainsfrom the previous month, helped by government policy measures to bolster demand in both urbanand rural areas. A total of 1.10m vehicles was sold last month, up from 1.06m in March 2008, whichpreviously posted the highest monthly sales. (09/04/2009)mmmmmmmmmmmmmmmmmmmmmmChina car sales reach record high (Financial Times) www.thinkingeurope.eu
  • 12. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.JapanJapanese wholesale prices are falling at their fastest rate since 2002, March figures showed, asweakening domestic demand on top of falling commodity prices drives Japan toward its second boutof deflation this decade. With interest rates already almost at zero, analysts say the Bank of Japan haslimited weapons to fight deflation in the countrys worst recession since World War Two.(12/04/2009).........bbbbb............................................................................................................Japan wholesale prices slide, deflation ahead (Reuters)RussiaRussia posted a budget deficit of 50 billion rubles ($1.5 billion) or 0.1 percent of the country`s grossdomestic product in the first quarter, Finance Minister Alexei Kudrin said on 9 April.According to the finance minister, federal budget revenues declined by 473 billion rubles ($14.16billion) or 24.5 percent in the first quarter on the same period of last year while expendituresincreased by 447 billion rubles ($13.38 billion) or 33.6 percent. (10/04/2009)nnnnnnnnnnnnnnnnnnnnRussia posted $1.5 bln budget deficit in first quarter (Russian Information Network)Russian railroad monopoly RZD said its losses in the first three months of 2009 were 26.8 billion rubles($800 mln), while second-quarter losses were expected at 14.2 billion rubles ($418 mln). The 2009 netlosses of RZD, or Russian Railways, could total 49.7 billion rubles ($1.5 billion), the director of themonopoly`s corporate finance department said. (10/04/2009)Russia`s RZD posts $800 mln loss in 1Q09 (Russian Information Network)Russia will spend 3 trillion rubles ($90 billion) on measures to fight the economic crisis, including 1.4trillion rubles ($42 billion) from the federal budget, the Prime Minister said.He also pledged large-scale government financial assistance to key defense companies, apart from theMiG aircraft building corporation, which has already received 15 billion rubles ($449 million), and theKhrunichev research and production space center, which has been given 8 billion rubles ($239.5million). He said a total of 70 billion rubles ($2 billion), or 170 billion rubles ($5 billion), taking intoaccount loan guarantees, would be channeled into the defense sector this year. (06/04/2009) fffffffffffRussia to spend $90 bln on anti-crisis measures in 2009 (Russian Information Network)ffffffffffffffffffffTurkeyAfter successfully completing a three-year, $10-billion stand-by deal in May 2008, Turkey is discussinga new loan deal with the International Monetary Fund of up to 45 billion dollars, which is hoped willhelp combat the expected recession. (11/04/2009),,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,IMF to meet Turkish authorities over loan deal (France24) www.thinkingeurope.eu
  • 13. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.UkraineFew areas of Europe have taken such a devastating blow from the world economic crisis as theindustrial heartland of eastern Ukraine, home to giant enterprises in the steel and metals industry inwhich orders have dried up nearly completely and prices have plummeted. (07/04/2009),,,,,,,,,,,,,,,,,,,,,,Economic crisis sweeps eastern Ukraine (International Herald Tribune)UnitedcStatescPresident Barack Obama said the $787 billion economic stimulus plan is beginning to take hold andthat work is coming in "ahead of schedule and under budget." Obama highlighted the administrations2,000th project funded through the $48.1 billion part of the program allocated specifically totransportation infrastructure projects. (13/04/2009)Obama extols virtues of stimulus spending (CNBC)Chrysler and potential partner Fiat SpA are discussing a new management and board for the U.S.automaker under a proposed alliance that could see Fiat take a stake in Chrysler. Chrysler is racing tocomplete a partnership with the Italian automaker by April 30, with the Obama administrationwarning the alternative would be bankruptcy. (13/04/2009)mmmmmmmmmmmmmmmmmmmmmChrysler, Fiat discuss new management and board (Reuters)U.S. officials will not look to close any banks based on the results of "stress tests" being conducted todetermine how the largest U.S. banks would fare under more adverse economic conditions, a sourcefamiliar with official talks said on 9 April. (09/04/2009)ccccccccccccccccccccccccccccccccccccccccccccccNo U.S. banks will close due to stress tests (Reuters)HIGHLIGHTSInformal ECOFIN Council in Prague on 3rd and 4th April 2009:At an informal meeting in Prague, EU Finance Ministers and Central Bank Governors reachedagreement on key principles for the reform of financial market supervision. The meeting was chairedby Czech Finance Minister Miroslav Kalousek. On the second day of the informal ECOFIN meeting, theFinance Ministers and Central Bank Governors discussed the reform of the structure used to supervisethe financial market in the EU. www.thinkingeurope.eu
  • 14. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.At the beginning of the informal meeting of Ministers and Central Bank Governors, Mr. de Larosièreset out the main conclusions and recommendations of his financial supervision report. He wasfollowed by Commissioner Charlie McCreevy, Commissioner Joaquín Almunia and President of theEuropean Central Bank Jean-Claude Trichet. The participants then discussed the proposed institutionalchanges. The Ministers and Governors singled out the excessive focus on the supervision of individualfinancial market institutions and the related neglect of systemic risks as shortcomings of the currentsystem. The early warning mechanism was also found to be wanting. The Ministers and Governorsconcluded that supervision of macro-financial stability needs to be strengthened at EU level, andtherefore they supported the creation of a new body, the European Systemic Risk Council.(04/04/2009)STATEMENT by the informal EcofinccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccMinisters and Governors agree on principles for financial supervision reform (EU2009.CZ)G20 Summit in London on 2nd April 2009:The G20 agrees to channel $1.1 trillion (€832bn) into the IMF and other institutions and to tightenrules on financial markets. G20 leaders announced measures to promote transparency and tosafeguard against system-wide threats and excessive risk-taking. These include new rules on bankers’pay and bonuses - an issue that has sparked public anger - and an end to tax havens that do not sharetax information.To help countries in trouble, the leaders endorsed $500bn (€370bn) in new funds for the IMF, bringingits resources to $750bn (€556bn). The EU is contributing €75bn of this. In addition, G20 leaders agreedto a $250bn (€185bn) increase in the IMFs overdraft facility for struggling member countries. Afurther $100bn (€74bn) will be available to fund development, and will be channelled via banks set upby donor countries. $250bn (€185bn) will get trade flows started again. The leaders said the stimulusshould amount to $5tr (€3.7tr) by next year, the largest the world has ever seen. Leaders predictedthis would create millions of jobs worldwide.The G20 also gave the World Trade Organisation responsibility for naming and shaming those whoresort to protectionism. It pledged to conclude rapidly the Doha trade talks- which could boost theworld economy by $150 billion.In line with EU recommendations, the G20 plan gives international financial institutions a bigger role inmonitoring economic risks. It also gives emerging and developing economies more of a voice in theseinstitutions. (02/04/2009).G20 summit - leaders statement: Download pdf filecccccccccccccccccccccccccccccccccccccccccccccccccRemarks by President Barroso, press conference: "London G20 results: "much more ambitious thanexpected"G20 leaders confident and determined in face of economic crisis (European Commission) www.thinkingeurope.eu
  • 15. Centre For European Studies FINANCIAL CRISIS WATCHLast updated on 15/04/2009 To view full articles click on hyperlinks.OUR COMPETITORS’ VIEWS ON THE FINANCIAL CRISISPESThe Global Progressive Forum 2009, co-organised by the PES, the PES Group in the EuropeanParliament and the Foundation for European Progressive Studies, took place in Brussels on 2nd and 3rdApril 2009. Along with Bill Clinton, the Global Progressive Forum brought together politicians, tradeunions, NGOs and representatives of progressive international organisations and aimed to coincidewith the end of the G20. Discussions focused on finding new answers to the global economic andfinancial, food, climate and energy crises. A call for a ‘Global New Deal’ was launched, which calls fornew fairness and a new respect for the planet. A ‘Global New Deal’ also includes the biggestcoordinated fiscal stimulus in modern history to stop unemployment and poverty, financial marketregulation and supporting the transition to a renewable and energy efficient economy. (03/04/2009)Global Progressive Forum 2009 (PES News)UPCOMING EVENTSEvent: Spring Meeting: World Bank Group and International Monetary Fund ……………………Date: 25-26 April 2009, BrusselsEvent: Brussels Economic Forum: "Beyond The Crisis: A Changing Economic Landscape"vDate: 14-15 May 2009, BrusselsEditor: Roland FreudensteinffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffffResearch Assistance: Katarína Králikovácccccccccccccccccccccccccccccccccccccc/ccccccccccccccccccccccDesign: José Luis FontalbacccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccccQuestions and comments: briefs@thinkingeurope.eu www.thinkingeurope.eu
  • 16. Centre For European Studies FINANCIAL CRISIS WATCHANNEXFinancial Stability Frameworks and the Role of Central Banks: Lessons from the CrisisAuthor/Editor:,Nier,vErlendmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmmAuthorized for Distribution: April 1, 2009Summary: This paper sets out general principles for the design of financial stability frameworks,starting from an analysis of the objectives and tools of financial regulation. The paper then offers acomprehensive analysis of the costs and benefits of the two main models that have emerged formodern financial systems: the integrated model, with a single supervisor outside of the central bank,and the twin-peaks model, with a systemic risk regulator (central bank) on the one hand and a conductof business regulator on the other. The paper concludes that the twin-peaks model may become moreattractive when regulatory structures are geared more explicitly towards the mitigation of systemicrisk-including through the introduction of new macroprudential tools that could be used alongsidemonetary policy to contain macro-systemic risks; through enhanced regulation and special resolutionregimes for systemically important institutions; and a more holistic approach to the oversight ofclearing and settlement systems. Since the optimal solution may well be path-dependent and specificto the development of financial markets in any given country, a number of hybrid models are alsodiscussed.Series: Working Paper No. 09/70Subject(s): Central banks | Financial crisis | Monetary policy | Financial stability | Financial systems |Financial sector | Bank supervision | Bank regulations | Bank resolution | Credit risk | RiskmanagementAuthors keyword(s): Systemic risk | monetary policy | prudential regulation | crisis resolutionFinancial Stability Frameworks and the Role of Central Banks: Download pdf file << International Monetary Fund >> www.thinkingeurope.eu