Warnings by Russia, China dire economic straits in 2009

Russia and China issued stark warnings on Wednesday about the impact of the crisis on their recently booming economies in 2009, as stocks and oil prices took a hit from economic gloom over Christmas.

A top official in Moscow warned that the crisis could spark popular unrest after a Kremlin economic aide said Russia next year would have its first budget deficit since the 1998 financial crisis, which brought the country to its knees.

Japan also approved a record-high budget aimed at avoiding the worst effects of the crisis and there were reports that Germany was preparing to pump up to 40 billion euros (56 billion dollars) into the economy in a new rescue plan.

"We need to take unprecedented measures when in an extraordinary economic situation," Japanese Prime Minister Taro Aso said at a news conference after his cabinet backed the new 980-billion-dollar (700-billion-euro) budget.

"Japan cannot evade this tsunami of world recession. But by taking bold measures, we aim to be the world's first to come out of recession," he said.

In Asian stock markets, Tokyo tumbled 2.37 percent and Chinese shares closed down 1.76 percent. European stocks also slipped, with the FTSE 100 in London closing down 0.93 percent and the CAC 40 in Paris down 0.39 percent.

There was more bad news coming from the United States, the world's biggest economy, where US government figures showed jobless claims rising by 30,000 over the past week to 586,000 and incomes and spending contracting in November. With oil prices at their lowest level for four years because of weak global demand, the price of light sweet crude for delivery in February shed 1.56 dollars to 37.42 dollars a barrel on the New York Mercantile Exchange (NYMEX).

The low price spells bad news for Russia, the world's second-biggest producer after Saudi Arabia. "The deficit is caused by the fall in oil prices, above all," Kremlin economic aide Arkady Dvorkovich was quoted as saying.

Oil prices reached record highs of more than 147 dollars a barrel in July.

Commenting on the worsening situation, Deputy Interior Minister Mikhail Sukhodolsky warned that unpaid wages, the threat of layoffs and unpopular government anti-crisis measures "may aggravate the protest mood."

China's top economic planner also warned of "great challenges" ahead.

The head of the National Development and Reform Commission, Zhang Ping, told parliament that "grave risks" lay ahead for the government's economic goals if China did not manage to stimulate demand and maintain export growth.

Economists have warned that the global downturn could mean that China will end 2008 with its weakest economic growth for nearly two decades. China has not posted annual growth of less than 7.6 percent since 1991.

The dollar was on the back foot in currency exchanges, falling to 90.37 yen in Tokyo from 90.96 in New York late Tuesday and dropping against the euro in light trading in London to 1.3991 dollars from 1.3924 dollars on Tuesday.

In a sign of the times in Germany, Europe's biggest economy, poodles, terriers and sheepdogs queued up for rations in the country's first soup kitchen for pets in the German capital.

The soup kitchen was opened in October and offers free food for pets belonging to pensioners and the growing ranks of Berlin's unemployed. Julia Raasch, who heads the soup kitchen, said: "We've already signed up nearly 400 people. And our stocks are dwindling fast."

Source: Agencies

AT&T likely to cut 12,000 jobs

AT&T, the largest US phone company, will cut 12,000 jobs, striving to trim expenses as the US economy falters. The reductions amount to about 4% of the workforce, Dallas-based AT&T said on Thursday in a statement.

The company plans to record $600 million in expenses for severance this quarter. The reductions would bring AT&T’s total job cuts to more than 25,000 this year. The carrier and its smaller competitors are grappling with slowing consumer spending and a jobless rate at its highest level in 14 years.

AT&T fell 18 cents to $28.90 in early trading after closing at $29.08 on Wednesday on the New York Stock Exchange. The carrier also plans to reduce spending next year to cope with the slowdown, with plans to give specific forecasts for 2009 spending plans in late January.

The carrier said its still adding jobs in its wireless and video units. In July, the company said it would eliminate 10,000 jobs to reduce overlap in some departments after its 2006 purchase of BellSouth Corp. Before that, the company announced 4,650 cuts, some in its home-phone business, which has lost customers to cable operators and wireless competitors.

Source: Agencies