European stocks fall sharply; US bail-out hasn't eased the crisis; China's finances well buffered; African governance improving - Mauritius number one; and more

Top of the Agenda: Europe Banking Fears

Stocks fell sharply in Asia and Europe this morning as fears over weakness in the European financial system spread. Leading indices in Britain, Germany, and France all fell roughly 6 percent in early trading (NYT), and oil fell below $90 a barrel for the first time since February. The declines came as Germany took what the Financial Times calls a "dramatic move" by saying it would guarantee all funds in German bank accounts--currently worth nearly 570 billion euros ($771 billion)--to protect against panic withdrawals. Germany also agreed to a $68 billion deal (Deutsche-Welle) to bail out the country's leading real estate lender, following a parallel decision in Britain last week.

The Economist reports a number of European central banks have started taking similar moves and looks at some of the fallout in European financial markets. The Washington Post says today's news of Germany's broad hedge underlines the fact that a $700 billion U.S. bailout package, agreed late last week, has not eased the crisis of confidence in global credit markets. Indeed, there are now signs that commercial paper markets--money market funds issued by large corporations--have seized up as well (Bloomberg), with potentially devastating ramifications for corporations beyond the financial sector.

Background:

• A new Daily Analysis looks at the global ripple effects of the financial crisis.

• In a new feature called CFR Forum, a panel of experts discusses what effects the credit crisis is likely to have on U.S. geopolitical power.

 

Pacific Rim: China's Financial System

China's Prime Minister Wen Jiabao said China's financial system as a whole has proven well buffered (Xinhua) to the financial concerns elsewhere in the world. He says Chinese financial firms have generally increased their strength during the course of the crisis.

The Wall Street Journal looks at how East Asian central bankers, including China's, have responded to the U.S. bailout plan.

KIM JONG-IL: A North Korean paper reported that the country's leader, Kim Jong-Il, was seen in public (Chosun Ilbo) watching a football match. If true, it would be Kim's first public appearance in nearly two months, after his absence at major parades led many to question whether his health might be failing.

• A recent Backgrounder looks at possible fallout scenarios in a post-Kim North Korea.

 

Elsewhere

Tzipi Livni expresses concern for peace talks in first public address since election.

Ibrahim report shows governance improving across much of sub-Saharan Africa.

This is an excerpt of the CFR.org Daily News Brief. The full version is available on CFR.org.