The world reacts: Wall Street woes ripple across global markets
Spain and Taiwan are cracking down on short sellers of stock. Britain’s prime minister sees his poll numbers plummet, while Japanese financial giants snap up pieces of distressed U.S. lenders. And some in France and Germany are hailing what they see as a humiliating blow to “Anglo-Saxon” economics.
As the U.S. government struggles to get a handle on Wall Street’s meltdown, the economic, political and even cultural effects are being felt around the globe.
Spain, Australia, Taiwan and the Netherlands are among the more than a dozen nations that have followed Washington’s lead in placing new restrictions on short sellers, investors who profit by betting that a stock will go down. Short sellers have been widely blamed with accelerating the panic by targeting the stocks of shaky financial companies.
Madrid’s National Commission on Market Values issued temporary new rules requiring short sellers to declare any position greater than 0.25 percent of a stocks’s total value in a range of Spanish banks and insurance companies.
Finance ministers in Germany, France and Japan all voiced sup- port for the U.S. $700 billion rescue plan, designed to take huge numbers of bad home loans off the market and get banks lending again. But none of the countries said it planned a similar bailout at home.
“There is no need to take action in Japan,” Finance Minister Bunmei Ibuki told reporters in Tokyo on Sept. 22 after a conference call of the Group of Seven financial ministers. Japan’s banks, recovering from more than a decade of bad loans and minimal growth, do not have major holdings in the U.S. have battered the poll numbers of Prime Minister Gordon Brown. Mr. Brown addressed a major Labor Party conference on Sept. 22 amid growing talk that he may face a challenge to his leadership.
Mr. Brown’s speech “to a rattled and rebellious Labor Party will decide if he survives as prime minister — or leaves Downing Street in abject humiliation,” Britain’s bestselling tabloid, the Sun, pronounced in an editorial before the speech.
Across the English Channel, many in Western Europe are tak-
Some in France and Germany are hailing what they see as a humiliating blow to “Anglo-Saxon” economics.
mortgage markets, Mr. Ibuki said.
Some top Tokyo lenders are even treating the U.S. economic mess as a buying opportunity.
Mitsubishi’s financial arm on Sept. 22 announced an $8.5 billion deal to purchase up to 20 percent in struggling Wall Street titan Morgan Stanley, amid talk that Nomura Holdings is preparing a bid to buy the Asian operations of bankrupt investment bank Lehman Brothers.
In Britain, troubles in the domestic housing and banking sectors ing a perverse satisfaction in seeing the staunchly free-market Bush administration desperately seeking a massive government bailout to save a vital national industry — something American champions of capitalism have long denounced EU governments for doing.
Alabama Sen. Richard C. Shelby, ranking Republican on the Senate Committee on Banking, Housing and Urban Affairs, said two weeks ago that he had difficulty supporting a U.S. bailout because “it sounds like France to me.”
Bernard Carayon, a member of the French parliament from the party of President Nicolas Sarkozy, praised what he called the U.S. government’s “pragmatism and incisiveness.”
“The state exists for the common good and so it’s natural that they intervene,” he told Bloomberg News. “I’m sure our American friends will draw all the necessary lessons from a regulatory and accounting point of view.”
Adding insult to injury, French banks have moved to boost their own capital base — not with government money but through private equity offerings. Three of France’s biggest lenders have raised or are seeking nearly $20 billion in new funds from shareholders or from issuing new stock.
Officials in Sweden, long considered the classic European social welfare state, are trumpeting the fact that the rescue plan fashioned by Treasury Secretary Henry M. Paulson Jr. and Federal Reserve Chairman Ben S. Benanke is inspired in part by a similar Swedish bailout of troubled banks in the 1980s. Swedish finance officials have even briefed their U.S. counterparts on the plan in recent days.
In Germany, conservative Chancellor Angela Merkel had some unusually pointed criticism for U.S. and British financial regulators, saying they ignored her calls for greater corporate financial transparency and disclosure at previous Group of Eight summits.
“I criticize the markets’ assumption that they’re [always] in the right,” Mrs. Merkel told the Munich Merkur newspaper. “Sadly, backed by the governments in Great Britain and the U.S., they’ve resisted voluntary regulation.”
Finance Ministry spokesman Torsten Albig told reporters in Berlin, “The Anglo-Saxons are moving massively in our direction.”
But it is Germany that has seen perhaps the most embarrassing foreign scandal related to the Wall Street crisis.
Three top executives at KFW, a state-owned development bank, have been suspended after the revelation that the bank erroneously wired some $426 million to Lehman Brothers in New York just as the investment bank was declaring bankruptcy. It is not clear whether any of the money can be recovered at what one newspaper has dubbed “Germany’s dumbest bank.”