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London
12 February 2009
Stocks are down on the world markets where traders are less than enthusiastic about the $798 billion U.S. compromise economic stimulus package hammered out between congressional negotiators. And in London, Prime Minister Gordon Brown has strongly criticized the banking bonus culture.
Far from greeting the long-sought U.S. economic compromise, the markets reacted with reserved pessimism to the stimulus package. Many overseas investors feel it just will not be enough to fix the huge economic ills facing the world's largest economy.
That lack of optimism was felt first in Asia. In Japan, the Nikkei dropped three percent while Hong Kong's Hang Seng lost 2.3 percent.
The Japanese electronics manufacturer Pioneer says it will lay-off 10,000 workers. The firm also plans to close its loss-making flat-screen television business.
In Europe, that same sentiment coupled with a raft of additional disappointing earnings reports kept the downward pressure on.
In France, the world's largest nuclear reactor operator, EDF, reported a 40 percent drop in net profits last year.
In Britain, drinks maker Diagio and communications giant British Telecom both warned of lower earnings.
Meanwhile, British Prime Minister Gordon Brown faced a two-and-a-half-hour grilling session in front of a parliamentary committee.
Now that a number of British institutions are partly-owned by the taxpayer, he was asked what can be done about the huge bonuses many banks have been paying out to top executives.
"[The] short-term bonus culture in banks has got to end and we are putting in measures that will bring that to an end. The first stage of that is to make sure that performance is based on long-term success, allowing rewards to take place and not on short-term deals," he said. "And the second aspect of that is not to reward failure in any way."
The general mood on the streets of London is things will be getting tougher before they get better. The governor of the Bank of England says the British economy will decline sharply in the first half of this year.
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