Citigroup layoffs trump global plan

Investors are worried that governments will not respond adequately to a severe global downturn.

WASHINGTON (AP) — Another round of massive layoffs at Citigroup and more bad financial news Monday led investors to shrug off the lengthy action plan from world leaders designed to address a sagging global economy.

Citigroup said it will cut about 53,000 more jobs in coming quarters as the banking giant struggles to deal with massive losses from deteriorating debt.

The global action plan was produced at a weekend meeting of leaders of the Group of 20, which included the world’s wealthiest countries such as the U.S., Japan, Germany, Britain and France plus emerging powers such as China, Russia, Brazil and India.

Analysts say it will take more than one meeting to turn the tide for a global economy undergoing its worst upheavals in decades.

“To put it harshly, there is little point in trying to figure out ways to prevent a disease once a patient is sick,” Credit Suisse Japan analyst Shinichi Ichikawa said in a report released Monday. “The just-concluded summit came up with no specific prescription to alleviate the effects of the most serious international financial crisis.”

T.J. Bond, a Merrill Lynch economist in Hong Kong, said some investors were disappointed there was no explicit announcement of coordinated fiscal stimulus measures.

European analysts said the main winners were developing economies such as China and India, which have emerged from it wielding more influence in global decision-making than they have until now.

But investors are worried that governments will not respond with enough force and speed to combat what is shaping up to be a severe global downturn.

The Federal Reserve reported Monday that industrial output posted a better-than-expected rebound in October of 1.3 percent, but that increase came after the biggest one-month drop in production in more than 60 years. According to revised figures, factory output fell by 3.7 percent in September, the steepest plunge since a 5 percent drop in February 1946.

Both September and October were influenced by the hurricanes along the Gulf Coast and the strike at airplane manufacturer Boeing Co. Without those factors, the Fed estimated that production would have fallen by about 0.6 percent in both months.

Also Monday, the National Association for Business Economics released a somber new forecast projecting that the overall U.S. economy, which shrank at an annual rate of 0.3 percent in the July-September period, would contract at a rate of 2.6 percent in the current October-December quarter.

Just a month ago the group predicted the economy would post a 0.1 percent GDP growth rate in the fourth quarter.