In a sign of how concerned world leaders are about a slide in stocks that wiped about US$2.5 trillion off global markets this week, Italian Prime Minister Silvio Berlusconi said finance ministers from the G7 nations would meet in “just a few days” to seek a common plan of action.
No other member of the group — which does not include the world’s second-largest economy China — has confirmed the meeting.
Worries the eurozone debt crisis was spreading and the US was slipping into recession drove a week-long rout in financial markets. Better-than-expected jobs growth last month helped support Wall Street on Friday, but stocks slipped back into the red in late trading.
The US lost its top-tier “AAA” credit rating from Standard & Poor’s (S&P) on Friday, hours after investors alarmed by the eurozone debt crisis forced Italy to speed up an austerity drive.
China, the largest foreign holder of US government debt, made clear that Washington had only itself to blame and called for a new stable global reserve currency.
The S&P cut in the US long-term credit rating by a notch to “AA-plus” was an unprecedented blow and resulted from concerns about the nation’s budget deficits and climbing debt burden. The move is likely to eventually raise borrowing costs for the US government, companies and consumers.
Philippine Finance Secretary Cesar Purisima backed the call for alternative global reserve currencies and urged Washington to deal with its fundamental economic problems.
“[Unless it does] I think we may have entered an era of less predictable and less stable global financial markets as a result of the credit downgrade of the global reserve currency and the benchmark financial instrument. This resulting unease may in the short-term make investors more tentative and slow down the global economy,” Purisima said.
In Europe, Italy buckled to world pressure by pledging to bring forward cuts to balance the budget in 2013 in return for European Central Bank (ECB) help with funding.
After a frantic round of telephone diplomacy, Berlusconi said his government would bring forward cuts to balance the Italian budget in 2013, a year ahead of schedule, and rush through welfare and labor market reforms.
Investors have been unimpressed by a 48 billion euro (US$68.46 billion) austerity package passed by Berlusconi’s government, partly because most of the measures were delayed until after elections scheduled for 2013, for clear political reasons.
Discord among EU policymakers over how to stop a disastrous spread of the sovereign debt crisis to Italy and Spain, the eurozone’s third and fourth-largest economies, has frustrated investors. The ECB disappointed markets by buying Irish and Portuguese bonds, but not government paper in Italy and Spain, where bond yields have blown out this week on fears they may need bailing out.
That now appears to have been a gambit to force Italy to act.
Beijing’s continued provocations in the Taiwan Strait reveal its intention to unilaterally change the “status quo” in the area, the US Department of State said on Saturday, calling for a peaceful resolution to cross-strait issues. The Coast Guard Administration (CGA) reported that four China Coast Guard patrol vessels entered restricted and prohibited waters near Kinmen County on Friday and again on Saturday. A State Department spokesperson said that Washington was aware of the incidents, and urged all parties to exercise restraint and refrain from unilaterally changing the “status quo.” “Maintaining peace and stability across the Taiwan Strait is in line with our [the
EXTENDED RANGE: Hsiung Sheng missiles, 100 of which might be deployed by the end of the year, could reach Chinese command posts and airport runways, a source said A NT$16.9 billion (US$534.93 million) project to upgrade the military’s missile defense systems would be completed this year, allowing the deployment of at least 100 long-range Hsiung Sheng missiles and providing more deterrence against China, military sources said on Saturday. Hsiung Sheng missiles are an extended-range version of the Hsiung Feng IIE (HF-2E) surface-to-surface cruise missile, and are believed to have a range of up to 1,200km, which would allow them to hit targets well inside China. They went into mass production in 2022, the sources said. The project is part of a special budget for the Ministry of National Defense aimed at
READY TO WORK: Taiwan is eager to cooperate and is hopeful that like-minded states will continue to advocate for its inclusion in regional organizations, Lai said Maintaining the “status quo” in the Taiwan Strait, and peace and stability in the Indo-Pacific region must be a top priority, president-elect William Lai (賴清德) said yesterday after meeting with a delegation of US academics. Leaders of the G7, US President Joe Biden and other international heads of state have voiced concerns about the situation in the Strait, as stability in the region is necessary for a safe, peaceful and prosperous world, Lai said. The vice president, who is to be inaugurated in May, welcomed the delegation and thanked them for their support for Taiwan and issues concerning the Strait. The international community
COOPERATION: Two crewmembers from a Chinese fishing boat that sank off Kinmen were rescued, two were found dead and another two were still missing at press time The Coast Guard Administration (CGA) was yesterday working with Chinese rescuers to find two missing crewmembers from a Chinese fishing boat that sank southwest of Kinmen County yesterday, killing two crew. The joint operation managed to rescue two of the boat’s six crewmembers, but two were already dead when they were pulled from the water, the agency said in a statement. Rescuers are still searching for two others from the Min Long Yu 61222, a boat registered in China’s Fujian Province that capsized and sank 1.03 nautical miles (1.9km) southwest of Dongding Island (東碇), it added. CGA Director-General Chou Mei-wu (周美伍) told a