It was mostly bad news for the U.S. economy again last week, as official figures show an increase in the unemployment rate to 8.9 percent—the highest level in more than 25 years. Attempting to put a relatively positive spin on the news, President Barack Obama noted that the number of job losses declined in April, marking the smallest monthly loss in almost six months. During that period, a total of 3.94 million jobs have been lost, the largest total on record, exceeding even the number lost during demobilization after the second world war. In the finance sector, stress tests performed by U.S. banking regulators concluded that ten of the country’s largest banks were undercapitalized and require an infusion of at least $75 billion to survive an economic downturn.
In news from outside the United States last week:
1. In Venezuela, President Hugo Chávez initiated a new round of nationalization in the oil industry, seizing 60 oil service companies, at least a dozen oil rigs, 30 oil terminals, and 300 boats. Chávez announced the move during a visit to the country’s main oil producing region, stating, “To God what is God’s, and to Caesar what is Caesar’s. Today we also say: to the people what is the people’s.” Venezuela is home to the world’s second largest oil reserves, with 172 billion barrels of proven reserves. But PDVSA, the state-owned oil company, has suffered serious losses in recent years as a result of declining oil prices and a shortage of hard currency. Analysts expect global oil prices to increase next week on the news.
2. Jacob Zuma was sworn in as the third president of post-apartheid South Africa last week, following the ANC’s victory in nation-wide elections late last month. After taking formal control of the government on Saturday, Zuma announced a cabinet reshuffle intended to placate weary business interests. South African businesses had feared that Zuma’s election might result in a political shift to the populist left. But in promoting former finance minister and key Mbeki ally Trevor Manuel to the powerful position overseeing central planning, Zuma seems to be demonstrating his interest in maintaining a positive relationship with the center-right wing of the African National Congress.
3. Experts are warning that the German welfare state could collapse this year as a result of the continuing economic crisis and poor economic measures by the government. In a move criticized by economists last week, Chancellor Angela Merkel de-linked increases in pension payments with the prevailing national wage rate. Legislation passed by the ruling party and signed into law by Merkel last week prohibits future cuts to pension rates. Economists have criticized the move as an attempt to appease retired voters ahead of a general election scheduled for September. Germany is in the midst of the worst economic crisis in decades, raising concerns about political stability and economic growth.
4. Next month’s presidential elections in Iran will be contested by four candidates. In addition to Mahmoud Ahmadi-Nejad, who is seeking re-election, the Guardian Council is expected to approve three other candidates as meeting the qualifications to stand for office: a strong educational and political background and a proven commitment to the Islamic regime and supreme leader Ayatollah Ali Khamenei. The three other candidates will be: Mir-Hossein Moussavi, a leftist and former prime minister of Iran, Mehdi Karroubi, a noted reformer and former speaker of parliament, and Mohsen Rezaei, former commander of the revolutionary guard and noted hardliner.
5. Pakistan’s offensive against Taliban militants in the northern part of the country continued last week. The offensive focused on the Swat valley region, where the government had made a number of concessions to militants last month, including permission to introduce sharia law into the region. Full-scale operations began on Thursday, but the government eased a curfew on the region to permit civilians to flee on Sunday.