World financial crisis

Markets down amidst fears of worldwide recession

Article published on the 2008-10-15 Latest update 2008-10-15 16:39 TU

French PM Fillon predicts tough times ahead
(Photo: Reuters)

The roller-coaster continued on Wednesday as world markets reacted coolly to the US announcement that it would be buying into major banks. New York’s Dow Jones fell on Tuesday, a trend followed by Asian and European markets.

Hong Kong led in the falls, losing almost five per cent. London’s FTSE and Paris’ Cac-40 have both fallen in early day trading. Coming full circle, the American exchanges began falling again soon after Wednesday’s opening bells.

Fears that a worldwide recession is settling in have overpowered the unprecedented government intervention announced over the past week.

French Prime Minister François Fillon warned the French population of a difficult year to come, though he denied that a recession was in store.

After his government lowered the official GNP growth prediction for 2009 to 0.2 per cent, Fillon said that unemployment would increase, the economy would slow down and purchasing power would diminish.

“The best plan that we can propose to the French people is to continue, even to accelerate, structural reforms,” Fillon said.

European leaders, meanwhile, met in Brussels for an EU summit. While talks on an emission-reduction plan were scheduled, the financial crisis weighed heavily on the assembled leaders.

EU member countries called for an overhaul of the international banking system. The UK Prime Minister Gordon Brown, has called for the International Monetary Fund to be "rebuilt". German Chancellor Angela Merkel reiterated the call, saying that G8 countries should meet later in the year to create "a new financial charter".

Developing countries, which the UN has warned will be hit harder than others by this crisis, are also making plans.

The leaders of emerging economic powers India, Brazil and South Africa met in New Delhi on Wednesday to discuss the financial crisis.

Indian Prime Minister Manmohan Singh, Brazilian President Lula da Silva and South African President Kgalema Motlanthe are looking to increase bilateral trade between their countries.

Anti-poverty campaigner Vandana Shiva says the crisis arises because of speculation replacing "real economies", especially in rich countries.

It is true that it is the rich countries responsible and it’s the leaders of the rich countries who tragically happen to be the bankers, too, and the oil companies, too," she told RFI. "It’s a revolving door, you know, [Henry] Paulson is Treasury Secretary today and yesterday he was Morgan Stanley. That is the crisis, this mutation of corporate greed and into regulators and deregulators."