January 29, 2009 / 5:37 AM / 9 years ago

More jobs, wealth lost; Obama rips Wall St. bonuses

NEW YORK (Reuters) - More jobs and company wealth were lost around the world on Thursday as policymakers prepared more drastic action to inject life into the global economy and U.S. President Barack Obama made a tough attack on Wall Street greed.

Obama, whose stimulus package faces an uncertain road to his hoped-for mid-February completion, told reporters he was outraged by a report of some $18 billion in Wall Street bonuses paid at a time taxpayer money was being used to shore up the crumbling financial system.

“That is the height of irresponsibility. It is shameful,” Obama said, adding that his message to Wall Street players was “there will be time for them to make profits and there will be time for them to get bonuses. Now is not that time.”

Obama was more conciliatory with Republican senators, who accepted his offer to search for a compromise on an economic stimulus after the House of Representatives on Wednesday passed an $819 billion plan with no Republican votes. The Senate Republicans say the compromise must include big tax cuts.

As policymakers everywhere reached for more tools to fix the global crisis, European Central Bank President Jean-Claude Trichet said he could not rule out an interest-rate cut from the current record low of 2 percent.

In Britain, the Bank of England will begin its 50 billion pound (US$71.5 billion) program to unlock credit markets with purchases of corporate bonds, commercial paper and debt issued by banks that got government recapitalizations.

More data suggested the world recession was only getting worse.

The number of Americans receiving unemployment benefits jumped to a record 4.78 million in the week ended January 17, and first-time filings also rose, the U.S. Labor Department said.

Unemployment in Germany, Europe’s largest economy, rose nearly twice as much as expected in January.

Euro zone economic sentiment dropped to a record low in January.

Sales of new U.S. single-family homes fell 14.7 percent in December to the lowest level ever recorded, while U.S. durable goods orders dropped a fifth straight month.

“The recession continues to drag and is even intensifying,” said Andrew Bekoff, chief investment officer at LPB Capital LLC in Doylestown, Pennsylvania.

U.S. stocks tumbled, ending four-day winning streaks for the Standard & Poor’s 500, down 3.3 percent, and Nasdaq, which lost 3.2 percent. The U.S. Treasury debt market stumbled.

European stocks also fell. The FTSEurofirst 300 index dropped 1.8 percent.

A man with his son passes an electronic board displaying share prices outside a brokerage in Tokyo January 27, 2009. REUTERS/Yuriko Nakao

Friday may bring more bad news, when economists expect the Commerce Department to say gross domestic product, the broadest measure of U.S. economic activity, shrank at an annualized 5.4 percent in the fourth quarter.


More companies provided evidence of how deeply the global recession has cut into business prospects.

Ford Motor Co posted a larger-than-expected $5.88 billion quarterly loss, burned through $5.5 billion of cash, and said it will draw $10.1 billion from a credit line.

Eastman Kodak Co said it may cut 4,500 jobs after a surprise quarterly loss. Four U.S. airlines, led by Continental Airlines Inc, also posted losses. Boeing Co stock fell 5.9 percent a day after the company said it planned 10,000 job cuts.

A trader gestures as trading resumes on the first business day after the Chinese New Year holidays at the Chinese Gold and Silver Exchange Society in Hong Kong January 29, 2009. REUTERS/Garrige Ho

Industrial manufacturer 3M Co said it is cutting capital spending by 30 percent.

A bright spot was online retailer Amazon.com Inc, which said profit and sales in the critical holiday shopping season topped forecasts.

In Japan, Sony Corp posted a quarterly loss and said it expects a record annual deficit as demand falls and the yen strengthens, while rival Nintendo Co cut its full-year outlook.

The Swiss bank UBS AG said it is slashing 2008 investment bank bonuses by 80 percent.

The International Air Transport Association said air freight in December fell a “shocking” 22.6 percent from a year earlier, reflecting a slowdown in world trade.

One-third of world trade consists of goods sent by air, and IATA Director-General Giovanni Bisignani said a market bottom is nowhere in sight. “Keep your seat belts fastened and prepare for a bumpy ride and a hard landing,” he said.


In France, hundreds of thousands of workers staged a nationwide strike to force President Nicolas Sarkozy to do more to protect jobs and wages.

Romania began talks with the European Commission on a potential rescue loan. Russia, meanwhile, is discussing plans to bail out VTB, its second-largest lender, VTB’s chief executive said. New Zealand’s central bank cut its benchmark interest rate.

The euro sank more than a penny to below $1.30 after billionaire George Soros was quoted as saying the common currency might not survive in the absence of an EU plan to address toxic debt.

Reporting by Reuters bureaus around the world; Writing by Mark Trevelyan in London and Jonathan Stempel in New York; Editing by Kevin Liffey, Steve Orlofsky, Gary Hill

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