Recession deepens ahead of crisis talks

Washington: Nations are close to adopting a series of measures aimed at combating a global recession and laying the groundwork for a broad reconstruction of the international financial system, as world leaders arrived in Washington yesterday for a major economic summit that starts today.

The preparations for the meeting of the Group of Twenty (G20) ministers came as the blast of recession hit Europe on Friday and the Organisation of Petroleum Exporting Countries (Opec) called a special meeting in Cairo on November 29 to tackle slumping oil prices. Crude prices fell again yesterday, with Brent North Sea crude for January at $55.34.

Among the most notable measures under discussion at the G20 summit would be a new body to supervise the regulation of global financial institutions. The "college of supervisers" would bring together international regulators to coordinate oversight of the world's 30 largest financial institutions, according to officials familiar with the plans.

The new body would be designed to add an extra level of scrutiny to the way banks are monitored and to catch excessive risk-taking of the sort that contributed to the current economic crisis. The US, Europe, Japan and major developing nations are also close to a deal to create an "early warning system" to detect weaknesses in the global financial system before they reach epic proportions, according to diplomatic sources, who spoke on the condition of anonymity.

In Europe, the EU announced that the 15 eurozone countries were in recession for the first time ever, with a 0.2-per cent contraction in the third quarter. In Asia, Hong Kong joined trading rival Singapore in the recession club and Japan seemed to be edging close.

- With inputs from agencies

Warning: US households teetering on $14tr debt pile

Free-spending US consumers who bought everything from homes to groceries on borrowed money are running out of credit, and paying the bills will cost the world's biggest economy and its trading partners dearly, analysts warned on Friday.

The housing bust has exposed just how much Americans were relying on rising home values to pad spending and replace traditional savings.

Over the past decade, American households have piled on $8 trillion in debt, an increase of 137 per cent, twice the gain seen in the size of the economy. At $14 trillion, the debt load is now roughly equal to the entire economy's annual output.

— Reuters