Finance crisis shows teeth with mass Citigroup cuts

A brutal financial crisis showed its teeth on Monday as US banking giant Citigroup announced a massive 50,000 job cuts and automakers begged governments to save them amid a spreading global recession.

Japan became the latest giant economy to confirm it had fallen into recession, following Germany and the eurozone last week.

Ailing Citigroup said that the global financial crisis and four consecutive quarters of heavy losses forced it to cut its global workforce by 50,000, bringing it to around 300,000.

It was the second largest US job-cut announcement on record, according to global outplacement consultancy Challenger, Gray & Christmas, after 60,000 by IBM in 1993.

In Washington, Democrats in Congress launched a new push to save the US auto industry, but the White House warned against draining funds from a huge finance industry bailout.

Democrats unveiled a 25 billion dollar plan using funds drawn from the 700 billion dollar bailout of the financial sector.

But President George W. Bush's administration, which leaves office in January, said the bank bailout funds were not the answer and called on Congress to adapt an existing 25 billion dollar loan to the auto industry for retooling to produce more fuel-efficient vehicles.

"The administration does not want US automakers to fail," White House spokeswoman Dana Perino said. But opening the government bailout program for banks to other sectors "is a slippery slope," she added.

Across the Atlantic, desperate executives of German automaker Opel turned to Chancellor Angela Merkel for government help in case US parent company General Motors goes bankrupt.

Opel said Friday it needed the German state to guarantee more than one billion euros (1.3 billion dollars) in loans.

Merkel said after meeting Opel managers in Berlin that "by Christmas" the finance and economy ministries would decide, together with representatives of the four states where Opel has plants, if it would provide such a guarantee.

Japan, the world's second largest economy, contracted 0.1 percent in the third quarter after shrinking 0.9 percent in the second, official data showed.

"This is not going to be a short or painless recession," warned Noriko Hama, a professor and economist at Doshisha University.

World stock markets dismissed a weekend Group of 20 financial crisis summit in Washington, convened by US President George W. Bush to address the worst financial crisis since the Great Depression.

Investors and analysts appeared unimpressed with a pledge Saturday by the leaders of the G20 industrialized and emerging economies to cooperate to galvanize growth and overhaul the world's financial architecture.

The group stopped short of announcing specific steps such as coordinated stimulus spending.

"Call us hopelessly optimistic, but we would have thought the heads of state of 20 troubled economies, gathering in one place, could have agreed to specific, coordinated actions to address the immediate problem of global recession," said Carl Weinberg, chief economist at High Frequency Economics.

International Monetary Fund chief Dominique Strauss-Kahn said in Tripoli that up to two percent of the world's income, or 1.2 trillion dollars, should be spent on reviving the global economy.

Brazil's central bank said it had spent some 46 billion dollars over the past two months to shore up its currency, the real, and to restore liquidity to troubled markets.

United Nations Secretary General Ban Ki-moon, with the help of the Emir of Qatar, has summoned more than 20 heads of state and governments to Doha on November 28 to discuss the global financial crisis, the UN said.

European stock markets closed sharply lower after more bad news, following a mixed performance in Asia.

In London, the FTSE 100 index of leading shares closed down 2.38 percent at 4,132.16. In Paris, the CAC 40 shed 3.32 percent to 3,182.03 and in Frankfurt the DAX lost 3.25 percent to 4,557.27.

US stocks pared opening losses, with the Dow Jones Industrial Average down 1.14 percent at 8,400.62 in late afternoon trade and the Nasdaq off 0.98 percent at 1,502.03.

The Confederation of British Industry, an employers organization, forecast Britain would likely be in recession for most of 2009.

With Germany, Italy and Ireland already in recession, European Commission chief Jose Manuel Barroso said Europe needed a continent-wide fiscal stimulus plan. "Exceptional moments... need exceptional measures," he said.

Sumber: MSN News