Global Economic News
East Asian Economic Contraction Gets Worse
March 2 (EIRNS)The South Korean economy continued to implode for the fourth month in a row in February. Industrial output fell in January at the sharpest rate since records began in 1970, Seoul's National Statistical Office reported March 2. Production in mining and manufacturing shrank 25.6% in January from a year before, following an 18.7% fall December.
The figures reflect not only the situation in South Korea, but East Asia as a whole, since China, Japan, and South Korea are all each other's largest or second-largest trade partners, and much of their trade is made up of steel, machinery, and other products for industry.
The crash is only going to get worse, as is demonstrated by the disastrous 30.9% contraction of imports, especially of raw materials and machinery, reported March 2 by the Knowledge Economy Ministry.
Tokyo also had to release more figures showing the industrial contraction of the world's second-largest national economy. Overtime pay in Japan fell by the most on record in January, the Labor Ministry reported on March 2. And Reuters reported that Japanese capital spending likely fell a record 16.6% in the fourth quarter from a year earlier, according to its own survey. This data will be released by the Ministry of Finance on March 5.
World's Shipbuilding Industry Collapsing
March 2 (EIRNS)As world trade collapses, still faster is the decline in shipping, and that decline is causing the disappearance of the world's shipbuilding industry. South Korea, the leading shipbuilder, is watching this demise with dire concern. Korean shipbuilders are still active because of a backlog in orders from the inflationary phase of the collapse, but new orders are almost gone.
Chosun Ilbo, a leading South Korean newspaper, reports that orders for only nine ships were made in January, worldwide, a meager 6% of last year's 151 ships, according to the global shipbuilding industry researcher Clarkson. Four went to Korea and five to China, while shipbuilders in other regions, including Japan and Europe, did not receive a single order.
In January, the global shipbuilding industry saw orders for new ships fall 96% from a year earlier, based on CGT (compensated gross tons). Korea's "Big 3" shipbuildersHyundai Heavy Industries, Samsung Heavy Industries, and Daewoo Shipbuilding and Marine Engineeringalso received no orders in February.
Economic Collapse of Poland and Hungary Threatens EU Disintegration
March 3 (EIRNS)"I think it would be a huge tragedy if Europe were to be divided again in two parts," commented World Bank president Robert Zoellick. However, the March 1 decision by the EU's 27 heads of state to reject any supplementary aid to Eastern Europe (Hungary requested a $180 billion rescue plan) immediately triggered the fall of their national currencies.
Yesterday, the Hungarian florint dropped another 2.86% and the Polish zloty fell by 2.53%a decline of 14% and 13%, respectively, since the beginning of the year. As reported earlier, this dramatically worsens the ongoing mass defaults of household debt, mostly contracted in euros and Swiss francs. The consumer debt bubble represents as much as 46% of Polish GDP, 65% of Hungarian GDP, and even 73% of Bulgarian GDP!
If nothing is done, writes the French publication Les Echos, Europe could awaken the old demons of division.
Globalization Wreaks Chaos in World Food Chain
March 5 (EIRNS)Instead of collaborative action to foster agriculture potential in all nations, given the world food shortage, chaos and deprivation are worsening.
* "Farmland Outsourcing." One pattern is for nations of relative means to "outsource farming" to neo-British Empire plantations in poor countries, desperate for any compensation. In recent days, Saudi Arabia celebrated the arrival of the first wheat shipments from the crop harvested on new Saudi plantations in Ethiopia, in a project announced in Summer 2008, called "King Abdullah Initiative for Saudi Agricultural Investment Abroad." The plan is to grow "strategic food commodities" on lands overseas. Such overseas projects have been heavily promoted from London, especially for Africa, as well as choice lands on the archipelago of Indonesia, the fourth-most populous nation in the world, with critical domestic food needs of its own. Ethiopia has 11 million persons dependent on food relief, while the Saudi wheat is flowing out.
* Argentine Agriculture Crisis. Hit by global crisis as well as terrible drought, harvests of wheat and corn have dropped by as much as 50%. Argentina in recent years ranked second among world corn exporters, and high in wheat and soybeans exports. There is a big reduction in the national cattle inventory because of drought hitting 80% of pasture lands. Over a million head have been lost in the province of Santa Fe; in Cordoba, stocks are down 500,000; in La Pampa, down 350,000.
The head of the Chamber of Agricultural Machinery Producers is warning of "popular uprisings" coming in many cities in the country's interior: small companies that supply the agro-machinery industry are going out of business, because larger producers of agro-machinery aren't giving them orders. "The payment chain has broken down in all the towns that depend on these industries, and the only solution is to reactivate the internal market, which buys 80% of our production," said the head of the Chamber. There have been emergency meetings this week with President Cristina Kirchner and farm producers.
* Cargill "expropriated" in Venezuela. On March 4, President Hugo Chávez ordered the expropriation of the local rice operations of Cargill, Inc., the world's foremost cartel food processor and marketeer. Army units were sent to the plants of Cargill and other rice processors, accused of causing shortages. The immediate issue is that the government ordered price controls some months back, on staples such as rice, milk, and vegetable oil, but certain processors subsequently got around the controls, by making less of the price-controlled staples, and switching to other products not under price controls (such as flavored rice, low-fat milk, etc.) Shortages ensued. Now Cargill is under orders to process 90% of its rice into "white" rice, which is price-controlled.
Yes, the face-off between the government and Cargill occurs in the context of Chávez's general policy of expropriations. Over recent years, the President has had a spree of nationalizations, from cement to steel, under his "21st-Century Socialism" campaign. Other food processors are now also under expropriation orders. However, Cargill takes the cake. Cargill representatives complain that they had to shift away from white rice, because their profits were too low.