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Daily Archives: October 11, 2008

Markets collapse raises heat on global leaders

Global stock markets plunged into freefall yesterday as pressure mounted for world leaders to contain the worst financial inferno since the Great Depression.


Stock exchanges from Tokyo to London to New York suffered more staggering losses — adding to the turmoil for finance ministers from the Group of Seven richest nations to discuss in Washington.
Wall Street shares plunged in opening trade, with the Dow Jones Industrial average sliding 682 points or 7.9 percent to fall below 8,000 points.
London's FTSE 100 index skirted very close to a 10-percent loss before a slight pullback, while in Paris the CAC 40 dived 10.57 percent and there were similar losses in Frankfurt.
Japan's Nikkei-225 index closed down 9.62 percent, Hong Kong lost 7.2 percent and Singapore 7.34. Tokyo briefly halted some trading in futures and options as the Nikkei saw its largest fall since the crash of October 1987.
A fresh injection of 45.5 billion dollars into Japanese money markets failed to stop the collapse, and the crisis also claimed its first Japanese victim, with Yamato Life Insurance filing for bankruptcy protection.
Nowhere was immune from the rout. South America's largest stock market in Sao Paulo was suspended after the market slid more than 10 percent. Trading in Moscow was also halted.
Shares around the world have crashed over the past two weeks since the collapse of Lehman Brothers in the United States put the focus on banks' disastrous lending on the US mortgage market.
Central banks have since spent hundreds of billions of dollars trying to keep credit markets moving. The United States and Britain have spent massively to prop up their banking systems and Iceland is fighting national bankruptcy.
Justin Urquhart-Stewart, marketing director at London-based Seven Investment Management, said the world now faces a "perfect storm" with a banking system in crisis and a dramatically slowing global economy.
With oil prices falling below 80 dollars a barrel amid gloomy predictions for the world economy, pressure grew for more coordinated international action.
Japanese Prime Minister Taro Aso, chair of the Group of Eight club of key economies, said he would call an emergency summit if the Washington talks this weekend did not reach a deal.
Spanish Prime Minister Jose Luis Rodriguez Zapatero urged an urgent meeting of euro-zone leaders.
The G7 meeting in Washington was to bring together finance ministers and central bankers from the United States, Germany, Japan, France, Britain, Italy and Canada.
Ahead of the talks, the International Monetary Fund (IMF) called for governments to work together, and reactivated an emergency lifeline first used to rescue ailing economies during the 1997 Asian financial crisis.
US officials said the United States could follow Britain's decision to take preferential shares in troubled banks, effectively part-nationalising them, in a bid to increase liquidity on credit markets.
US President George W. Bush vowed to take "strong action" over the crisis and emphasised "our common desire to work with our European friends to develop a best-as-possible common policy."
Lending between banks is at a standstill because banks fear other banks might fail, and want guarantees that contracts will be respected. The freeze is strangling credit throughout the global economy.
A wave of emergency interest rate cuts, rescue packages and massive injections of capital have all failed to assuage the panic.
The crisis of confidence has been underpinned by increasingly pessimistic forecasts for the global economy.
In a biannual report on the world economy, the IMF forecast that the United States would fall into recession this year, barely grow in 2009 and risked performing even worse than expected given current uncertainty.

More on pages 18, 19

Troubleshooter Ahtisaari wins Nobel Peace Prize

by Nina Larson*

The Nobel Peace Prize was awarded yesterday to Martti Ahtisaari, the former Finnish president who has spent 30 years ending conflict in troublespots ranging from Kosovo to Namibia and Indonesia.
The Norwegian Nobel Committee hailed the 71-year-old Ahtisaari "for his important efforts, on several continents and over more than three decades, to resolve international conflicts."
"These efforts have contributed to a more peaceful world and to 'fraternity between nations' in Alfred Nobel's spirit," committee head Ole Danbolt Mjoes said.
Ahtisaari, a quiet, portly man now afflicted by rheumatism, told Norwegian broadcaster NRK that his work as the UN special envoy to Namibia had been the highlight of his career.
"Of course Namibia is the most important since it took so long," he said, adding that he was "very pleased" to win the prestigious prize.
As the UN secretary general's special envoy, Ahtisaari guided Namibia towards a peaceful independence in 1990 after more than a decade of negotiations.
He also oversaw the 2005 reconciliation between the Indonesian government and Free Aceh Movement (GAM) rebels, ending a three-decade conflict that killed some 15,000 people.
In Europe, he helped Kosovo, which declared its independence in February, even though his mediation efforts failed to clinch an agreement between Serbia and Kosovo.
And in May 2000 the British government appointed Ahtisaari to co-head, with Cyril Ramaphosa of South Africa, the inspection of IRA arms' dumps in Northern Ireland.
"Throughout all his adult life, whether as a senior Finnish public servant and president or in an international capacity, often connected to the United Nations, Ahtisaari has worked for peace and reconciliation," Mjoes said.
Although he most recently displayed his talents as a mediator in Europe, Ahtisaari cut his diplomatic teeth in Africa. He was appointed Finland's ambassador to Tanzania in 1973, at the age of 36.
He became UN Commissioner for Namibia in 1977 and in 1978 was named the UN envoy to Namibia.
In 1994 Finland's Social Democratic Party nominated him to run for the presidency and Ahtisaari became the first directly elected Finnish president.
Made fun of by the press for his large size and his limp, Ahtisaari was ill at ease with the largely ceremonial role of president. With his true passion in foreign affairs, Ahtisaari likened his tour in domestic politics, which lasted until 2000, to "an extramarital affair".
At the end of 2005, Ahtisaari was appointed the UN special envoy for talks on Kosovo, seven years after he played a key role in bringing an end to hostilities in the Serbian province.
He recommended independence for the breakaway Serbian province, where there is an ethnic Albanian majority, but his inability to get the two sides to agree was a blow for him.
With its decision to hand the 2008 prize to Ahtisaari, the Nobel committee has returned to a more tradition interpretation of the award, after several recent prizes expanded its boundaries to take in environmental work, for instance.
Last year's Peace Prize went to former US vice president Al Gore and the United Nations panel on climate change.
Ahtisaari will receive a Nobel diploma, medal and a cheque for 10 million kronor (1.02 million euros, 1.42 million dollars) at a ceremony in Oslo on December 10.
The announcement of the prize came a day after the Nobel Literature Prize was awarded to French author Jean-Marie Gustave Le Clezio.
French and German scientists credited with the discovery of the viruses behind AIDS and cervical cancer won the medicine prize, while the physics prize was awarded to Makoto Kobayashi and Toshihide Maskawa of Japan and Yoichiro Nambu of the United States for groundbreaking theoretical work in fundamental particles.
Osamu Shimomura of Japan and US duo Martin Chalfie and Roger Tsien won the chemistry prize for a fluorescent jellyfish protein that has become a vital lab tool.
The Nobel Economics Prize wraps up the awards on Monday.