Losses and Downgrades
In France, Peugeot Citroen announced 8,000 job cuts and the closure of a factory in Aulnay, due to a large drop in demand (23 percent since 2007) as the economic crisis drags on. The company is now losing €200 million per month. Unions responded “with fury” as well as shock and demonstrations– the Aulnay factory is the first to close in twenty years.
Moody’s cut Italy’s government bond rating down two steps to Baa2 from A3, citing contagion from the problems in the rest of the eurozone economy (specifically, a greater risk of Greece leaving the euro zone and greater credit losses among Spanish banks). Italy’s rating is now the same as that of Kazakhstan, Bulgaria and Brazil.
Could former Italian Prime Minister, 75-year-old Silvio Berlusconi, be preparing his political comeback? Italian media report that Italy’s business and entrepreneurial community are all urging him to run, after Prime Minister Mario Monti announced he would not continue in office after 2013. A senior official in the PDL Party has said that Berlusconi, despite accusations of corruption and sex scandals and resigning last year in the midst of a financial crisis, will indeed run in 2013.
Missing the Targets
Greece reported that unemployment was 22.5 percent in April. The International Monetary Fund (IMF) announced that the Greek government is behind in a number of areas in implementing the policies agreed upon in exchange for bailout funds. In other words, no renegotiation of the terms of the bailout package, something that Greece’s leaders have frequently mentioned, seems likely.
China Slows Down
Due to decreased demand in Europe and the US, China’s economic growth has slowed down the most in three years, with its GDP increasing at a rate of 7.6 percent in the second quarter as compared with the previous year and with the previous three months, when it was 8.1 percent. China’s foreign exchange reserves for June were $3.24 trillion, lower than the expected $3.35 million.
No Easing From the Fed
The US economy seems to be somewhat hanging on (not that anyone here would exactly say that) with the number of people signing on for unemployment falling by 26,000, to a four-year low of 350,000.
Nonetheless, all the major stock indices closed down on Thursday. Information from minutes released on Wednesday by the US Federal Reserve added to the sense that economic woes will not change soon. The minutes revealed that the Fed is not planning any additional, as in more aggressive, measures to stimulate the sluggish US economy, in contrast to the European Central Bank (ECB). Last week, the ECB cut interest rates from 1 percent to 0.75 percent, a record low for the euro zone, and also cut its deposit rate from 0.25 percent to zero.
The ECB could cut rates more. As George Saravelos, currency strategist at Deutsche Bank, said in Reuters, “Every single central bank except for the Fed is easing, and until that happens we expect the dollar to stay supported.”
The Body Part Black Market
On the rise — yes, a sign of tough times — is a black market for body parts as well as hair, sperm and breast milk. Online advertisements for these can be found in Spain, Italy, Greece and Russia, says a New York Times article. In May, Israeli police detained ten people who were part of an international crime ring suspected of targeting impoverished people in Moldova, Kazakhstan, Russia, Ukraine and Belarus.
European Union special prosecutor Jonathan Ratel is in charge of a case in which seven people are accused of getting poor people from Turkey and former communist countries to come to Kosovo, with the promise of selling a kidney for up to $20,000. Says Ratel in the New York Times in a quote too illustrative ofp the growing economic divide:
“Organized criminal groups are preying upon the vulnerable on both sides of the supply chain: people suffering from chronic poverty, and desperate and wealthy patients who will do anything to survive.”
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