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The events of 11 September have had many repercussions  foremost
amongst them being a deepening of the financial insecurity pervading
much of the world economy. Nowhere has this been exemplified more than
in the major industrialised states at the heart of the capitalist
system.

After the terrorist attacks stock markets across the world began to
plummet. In the UK the FTSE 100 lost nearly six percent in a day (one
of its biggest losses ever) and at its lowest point was nearly 30
percent down on its high of nearly a year ago. 

This was mirrored by similar falls in the Dow Jones Index in the US,
the Nikkei in Japan, the Hang Seng in Hong Kong and other stock markets
across Europe, the Pacific and South America. Most have since recovered
at least part of their losses caused by the initial panic but their
continuing fragility mirrors the fragility of the 'real economy' of
which the stock markets are largely a reflection.

Indeed, if this supposed fragility of the 'real' economy was once in
question, it cannot be any longer. In November unemployment in the UK
started to rise, impelled by no less than 123,000 job losses in
manufacturing in the last year. In recent weeks, BP, the Prudential
insurance company, Rolls Royce and Waterford Wedgewood have been
amongst those that have announced plans to slash thousands of jobs. 

On mainland Europe the story has been similar: French telecoms giant
Alcatel has cut 10,000 jobs across the continent, Deutsche Bank 4,500
and Europe's second largest travel operator, Thomas Cook, has started
shedding over 2,500 jobs Europe-wide. 

In the United States the numbers signing up for unemployment benefits
has risen to the second highest in ten years on the back of severe job
losses across the hi-tech sector and in those industries (such as
airlines) most badly hit by 11 September. 

These have had a sizeable impact with companies like Boeing, Motorola
and Merrill Lynch cutting back their operations across the globe. The
US Federal Reserve has warned in its 'Beige Book' report that economic
activity in the US is now "sharply reduced" and most analysts are
expecting further cutbacks in output and sharp rises in unemployment.

The situation in the Pacific Rim is little better. Indeed, in the
"engine room" of the Far East  Japan  things are, if anything, even
worse. In early November the Japanese government went on the record as
admitting that the economy was probably in its worst state for 20 years
and the Bank of Japan has since downgraded further its own assessment
of the economy in the light of falling consumer spending and increased
job losses (Financial Times, 19 November). 

To give but one example, Matsushita, the largest consumer electronics
manufacturer in the world for much of the last fifty years (producing
brands such as Panasonic, JVC and Technics), has predicted that it will
be 1.5 billion in the red by the end of the fiscal year and is cutting
at least 8,000 jobs as a result of the weak domestic economy and
contracting export markets. 

Jt

www.worldsocialism.org


________________________________________________________________
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The competition ends 16 th of December 2001.

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