Global Economic News

Global Machine-tool Capability Facing 'Disaster'

March 26 (EIRNS)—Triggered by the freeze-up in credit from banks, the world's machine-tool industry could experience a 20% drop in orders and sales by 2010, says Andrea Riello, chief executive of the Italian machine-tool firm Riello. "The most likely scenario is disaster," he told the Financial Times. When manufacturing companies insist they are not going to be adversely affected by tighter credit, he said, "don't believe them."

Meanwhile, his company's Project Rumble, seeks to revolutionize ways to machine big titanium structures which are becoming increasingly important in the aerospace industry.

Japanese Minister Calls On U.S. To Go With Big Bailout

March 25 (EIRNS)—In an public statement unusual for a Japanese government official, Financial Services Minister Yoshimi Watanabe called on the U.S.A. to inject public funds into its financial system, in an interview with the Financial Times on March 25.

"It is essential" for the U.S. "to understand that, given Japan's lesson [from its 1990s crisis], public fund injection is unavoidable," Watanabe told the FT. While "it is very difficult for Japan to convey such a message to a foreign government ... Japan could convey through the G7 or central bank governors' meeting Japan's lesson and that we are prepared to take coordinated action if necessary," he said.

He warned that there could be a severe dollar crisis, if this is not done, especially given the huge excess liquidity flowing out of the U.S. "One thing is to fix the hole in the bathtub, [but] we must recognize that the current crisis is not as straightforward as past dollar crises." He also admitted that "it is not clear how big the hole [in the U.S. financial system] is because the fire has spread to products other than securitized products."

UN World Food Program: Hyperinflation Kills

March 24 (EIRNS)—Over the Easter weekend, March 22-23, the World Food Program (WFP) sent a letter to donating countries, asking for an extra $500 million in funds to maintain operations. The Rome-based WFP, the world's largest humanitarian agency, provides food to as many as 70 million people worldwide. In a March 24 conference call, agency representatives said they are experiencing a funding shortfall of $600-700 million, after "a 20% jump in food costs in the past three weeks." Of the additional money, 25% of it would go directly to additional fuel costs for distribution. With extra funds, agency budget would be double last year, at $3.4 billion.

A new addition to the obviously needy places in the world, is the once stable country of Afghanistan, which was food self-sufficient until the Blair/Cheney Global war on terror allowed that country's farmland to be turned into the world's largest source of opium-producing poppies (see Asia Digest for more on this).