Bank of England slashes interest rates to an all-time low. UK Interest rates were cut to the lowest level in history today. The Bank of England ordered a further 0.5 per cent reduction from its base rate to an unprecedented 1.5 per cent. It has never previously been below two per cent since the Bank was founded in 1694. But only half of borrowers will benefit and millions of savers will be hit by a further cut in the return on their investments. The Bank’s rate-setting Monetary Policy Committee said in a statement it was making the move because “the world economy appears to be undergoing an unusually sharp and sychronised downturn”. — Evening Standard
Rudd: my savvy plan for global regulation. The stabilisation of financial markets and stimulation of the global economy will require unprecedented policy co-ordination among the world’s political leaders in 2009. Failure to co-ordinate in this way will slow recovery and reduce the aggregate impact of the stimulus packages being contemplated or implemented by individual governments. Worse, fragmented actions could yield incrementally to “beggar thy neighbour” policies that run the risk of accelerating rather than ameliorating the crisis. — Kevin Rudd, Financial Times
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Obama: ‘If nothing is done, this recession could linger for years’. President-elect Barack Obama is calling on Congress to pass an economic recovery plan in the next few weeks. He warned about the deepening recession in a speech in Virginia on Thursday, less than two weeks before he takes office. “Now, I don’t believe it’s too late to change course. But it will be if we don’t take dramatic action as soon as possible. If nothing is done, this recession could linger for years”, Mr Obama said. On Wednesday, the Congressional Budget Office estimated the federal budget deficit this year at one trillion two hundred billion dollars. That is almost three times the size of last year’s deficit. And the estimate does not include an economic stimulus plan, like the president-elect proposes. — Voice of America
US consumer borrowing falls off a cliff. Consumer borrowing dropped by a record $US7.9 billion in November as Americans scrambled to boost savings in face of the deepening recession and amid an investor exodus from securities backed by credit-card and other loans. The slump brought consumer credit down to $US2.57 trillion, and capped the first back-to-back monthly decline since 1992, the Federal Reserve said today in Washington. Today’s figures foreshadow a prolonged drop in consumer spending as households try to reduce debt with their net worth declining and job losses accelerating, analysts said. — Bloomberg
US labour movement may bury the hatchet. The more than three-year-old split in the ranks of organised labour may be on the verge of mending. National labor leaders from the AFL-CIO and the break-away Change To Win federation began talks Wednesday “on the goal of reuniting America’s labor movement,” Dennis Gannon, president of the Chicago Federation of Labor said Thursday. Change to Win was formed by seven unions that broke from the AFL-CIO after disagreements on how to best organise. It includes the Service Employees International Union, the International Brotherhood of Teamsters, Unite-Here, and laborers, carpenters, farm workers and food and commercial worker unions. — Chicago Sun-Times
Financial blogger arrested in South Korea. South Korea says it has arrested an elusive blogger accused of undermining the country’s financial markets with his doom-mongering, ending a case that has illustrated government unease with the growing influence of online gossip in the world’s most-wired economy. The case comes amid government efforts to combat negative comments on South Korea’s ailing economy in the media and from private sector economists. The export-dependent economy has been among the hardest hit in Asia by the global financial crisis. The arrest and possible imprisonment of a web commentator will raise profound questions about freedom of speech in Korea, where bills that would crack down on civil rights are stirring tensions between lawmakers. — Financial Times