Global Economic News

Turkish Bank Chief: We're Better Off Without IMF

Sept. 7 (EIRNS)—After a year of stalling on an agreement between Turkey and the International Monetary Fund, Turkey's central bank governor Durmus Yilmaz told Bloomberg news agency that it would be better for Turkey if it did not get a loan from the IMF. "If Turkey on its own can deliver the results which are expected of an IMF program, it's much better for the country." Yimaz said, speaking on the sidelines of a London meeting of the G20 finance ministers and central bankers. He said the budget and balance of payments have decreased due to falling demand for Turkey's exports. "Can Turkey do without an IMF program? Yes it can. In the final analysis, to make an agreement with the IMF is a political decision."

The IMF has been desperate for Turkey to sign an agreement for the past year, but the government had dragged its feet on the conditionalities demanded by the IMF.

40% of World Job Losses Are in China

Sept. 9 (EIRNS)—Up to 40% of all world job losses in the international economic crisis have been in China, the newly released Green Book on Population and Labor of the Chinese Academy of Social Sciences reports, according to AsiaNews. China lost more than 41 million jobs after the crisis hit in 2008, and, despite the government stimulus program this year, more than 23 million people are still without work.

The report was delivered in Beijing by Prof. Cai Feng, director of the study, who said that the government stimulus program has failed to make job-creation its top priority. The $586 billion stimulus is aimed at creating over 51 million jobs, but this will not meet the need. Some 150 million workers have left their rural villages since the end of June, to find work in the cities, the highest number yet, according to Chen Xiwen, director of the Agriculture Ministry's Rural Employment Office.

Bank Bailouts Bankrupt EU States

Sept. 10 (EIRNS)—European Union states have already committed 31% of their GDP to bank bailouts, according to an estimate of the EU Commission published today by the Financial Times Deutschland. The same so-called expert forecast a 125% ratio of debt to GDP, for the EU as a whole, in 2020. These numbers, however, are based on theoretical figures for GDP and tax revenues, which are fantastically optimistic, and should be therefore considered the "wishful thinking scenario."

Of the 31% of GDP given out as capital injection or state guarantees for banks, an amount equal to 12.6% of GDP, has already been cashed in.

So-called anti-recession (conjunctural) measures have additionally cost 5% of GDP. Peanuts, especially if you consider that this is mostly to boost consumer spending (such as "cash for clunkers" for the car industry).

The wishful thinking scenario forecasts a 200% debt/GDP ratio for Ireland, 180% for the U.K., 125% for France and Italy, and almost 100% for Germany.

Economic Updates from Germany

Sept. 8 (EIRNS)—German exports "recovered" by 2.3% in July compared to the previous month, but compared with July 2008, exports are down 18.7%. Imports are down by 22.3%. German truck and trailer production is down 60%, compared to 2008. And the fact that the government's car-scrapping bonus just expired, will decrease new car sales visibly—more so outside of Germany, though, where most of the cars that were bought in Germany with the bonus were produced.

The German railway company, Deutsche Bahn, wants to eliminate 7,000 jobs in the cargo branch; Thyssen-Krupp wants to fire 3,000 steel workers; and the increase in the number of long-term unemployed creates an extra burden on the municipalities for welfare and Hartz IV benefits, which will increase from EU38.5 billion to an estimated EU42 billion next year. At the same time, municipalities are losing EU10 billion in tax income, because of the shrinking tax revenue base in industry, trade, and employment.

German Banks Speculate on Early Deaths in U.S.

Sept. 2 (EIRNS)—Last week, the German news weekly Der Spiegel reported on an emerging scandal: German banks are luring Germans to invest in life insurance funds in the U.S., with promises of respectable returns. These returns will only materialize if the U.S. citizens who are members of these funds die early. And the Americans are not dying as early as expected, which has posed the banks with the problem of telling their investors that the returns are not there. Some of the investors have sued the banks, which blew the whole scandal into the open.

Deutsche Bank, the initiator of these funds, runs this operation from London.