On Monday, the National Bureau of Economic Research said the United States has been in a recession since last December. With a financial crisis of this magnitude hitting the world's biggest economy, it's no surprise that nations across the globe are also feeling the heat. Here's what some recent editorials have had to say on the topic.
JapanPolitical will on trade (The Japan Times): Japan will have to take somewhat unpopular actions in response to a "global financial crisis triggered by the subprime mortgage fiasco in the United States."
Japan will have to accept large cuts in its tariffs on agricultural imports against strong resistance from domestic farmers. The government needs to consider how to overcome pains caused by the trade talks while strengthening Japan's farm sector. These cannot be achieved without strong political will and ingenuity.
IndiaA persisting weakness (The Hindu): It is no surprise that the U.S. Dollar is beginning to fall from a "position of pre-eminence." While the greenback will continue to play a powerful role in international trade, it will likely have to compete alongside other currencies to an extent not seen since the end of World War II.
The slowing down of the U.S. economy and the collapse of the housing bubble has underpinned the dollar's weakness. As always, the interest rate policies of central banks will play a major role in determining future currency alignments. The decline of the dollar may or may not be permanent but its persisting weakness would pose major challenges for India.
South KoreaBailout Package (The Korea Times): The Korea Asset Management Corporation (KAMCO), which is state-run, will "take over bad loans from struggling savings banks, signaling the start of public fund injections into the banking sector."
No doubt the bailout package is designed to help many ailing savings banks dispose of their exposure to risky project financing in the aftermath of the global credit crisis. The banks will be able to sell off their bad debts so that they can improve their financial health to better tide over the persisting financial turmoil originating from the U.S. subprime mortgage woes.
IndonesiaStepping up banking oversight (The Jakarta Post): The central bank must increasingly monitor its industry so as to avoid some of the dangerously risky actions taken by some failing banks.
Bank Indonesia (BI) should conduct intensive supervision by placing on-site supervisors at most banks. Such vigorous oversight is especially needed at this point in time when our financial sector is so vulnerable to the global financial turmoil.
United KingdomAffairs of state (Financial Times): As recently as last year, politicians were thrilled with London's financial institutions. Now -- not so much.
As Britain slides into what could be a deep and prolonged recession, bankers are becoming public hate figures. Labour and the opposition Conservatives sense the anger. Both the main political parties are struggling with their response.
South AfricaExpect a rate cut (Business Day): In a somewhat surprising move, the Reserve Bank will likely cut interest rates next week, in an attempt to "jolt" the nation "out of what could be a prolonged recession."
News over the past week has made it clear that [South Africa] will be increasingly drawn into the global downturn, through no fault of its own. When that is added to the growing pile of evidence that domestic inflation is going to fall faster than expected, the case for a rate cut looks pretty solid.