French President Nicolas Sarkozy called for change in the global financial system before crisis talks with US President George W. Bush outside Washington yesterday amid more gloomy economic news.
Bush was to greet Sarkozy, who is armed with a mandate from his EU colleagues to push for an overhaul of the financial system, and European Commission chief Jose Manuel Barroso at his Camp David retreat in Maryland.
But the White House has preemptively warned that the talks will yield no new policy proposals, nor a date or location for a world leaders summit that the French leader hopes will generate sweeping reforms.
Sarkozy and Canadian Prime Minister Stephen Harper have called for an international summit by the end of this year to coordinate an urgent response to the worst financial crisis since the Great Depression.
“The world is confronted by the worst economic and financial crisis since the 1930s. We need to reflect on the stakes, how we arrived here, who is responsible, and what happened,” Sarkozy told a summit of French-speaking nations in Quebec City, Canada, late on Friday.
“And we must draw lessons from it. The world must change,” he said.
Fallout from the crisis grew on Friday as fresh job losses were blamed on the turmoil and bank chiefs faced a backlash, while stocks closed a tumultuous week with more wild swings.
In the US, markets were reminded of the root of the problem as data showed construction starts on new US homes slumped an additional 6.3 percent last month to the lowest level since the recession in 1991.
Housing starts, or new home construction begun during a specific period of time — usually a month — and a key economic indicator, fell to an annualized rate of 817,000. That was down 31.1 percent from a year ago in the latest evidence of the bursting of the housing bubble that has ravaged the US economy and led to the global financial crisis.
Unemployment has grown across Europe and the US with key sectors such as car-makers badly hit. Analysts forecast worsening economic conditions in most advanced economies.
The finance industry’s reputation took a new blow in France where Caisse d’Epargne bank said it lost about 600 million euros (US$800 million) in a trading “incident.”
A company official, speaking on condition of anonymity, said that a group finance director had been sacked over the loss.
Also on Friday, Swiss newspapers angrily called on former top managers of banking giant UBS to return bonuses after the bank had to be rescued by the state this week.
“Mr Ospel, pay back your bonus! Now! Immediately!” screamed the front page of tabloid Blick, referring to former UBS chairman Marcel Ospel, who was forced to resign this year over billions in losses in the US subprime mortgage crisis.
The headline reflects widespread public anger in Europe and the US about the massive bailout of troubled banks, whose bosses have pocketed millions in bonuses in recent years.
More details emerged yesterday of a package of measures being put together by South Korea to shore up its economy after devastating currency falls and the departure of foreign investors from the local stock market.
Finance Minister Kang Man-soo is expected to announce an extra US$30 billion to help banks, businesses and the currency market when he unveils a package of measures today, South Korea’s Yonhap news agency said.
Asia’s fourth-largest economy has already taken a series of steps to prop up its currency and ease credit shortages, and Kang has said Seoul was ready to take “preemptive, swift and sufficient” measures to calm the foreign exchange market.
Global stock markets remained choppy on Friday after wild swings in the past week, but most were firm as some analysts said there was evidence of a “bottom” from the market meltdown of the past few weeks.
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