E.U. Suspends Talks With Russia
European Union governments suspended trade talks with Russia to protest the invasion of Georgia but shied away from tougher sanctions that would expose the energy-dependent E.U. to Russian retaliation. E.U. governments will walk away from the talks, underway since June, until Russia makes good on pledges to end the military occupation of parts of Georgia, French President Nicolas Sarkozy said.
Russia's status as the 27-nation bloc's main supplier of oil and gas and third-biggest trading partner shielded it from economic penalties that would damage Europe as well. Europe's lack of leverage is a blow to U.S. efforts to line up allies against Russia.
European Official Urges Action
The vice president of the European Central Bank says colleagues worldwide have not done enough to resolve the global financial crisis. Lucas Papademos says "the return to normality will require further actions" by policymakers -- suggesting that moderate interest rate adjustments may be likely.
Papademos also says banks must improve transparency, accounting and risk management practices, following $500 billion in subprime mortgage-related losses since January 2007.
The European Central Bank and Bank of England are expected to hold rates this week.
U.S. Remittances to Mexico Drop
The amount of money Mexicans sent home suffered its sharpest drop on record in July as the U.S. economy slowed and the dollar fell, Mexico's central bank reported. Remittances -- Mexico's second-largest legal source of foreign income after oil -- dropped by 6.9 percent in July compared with the year before. Jesus Cervantes, director of economic measurement for Mexico's central bank, said that over 20 percent of Mexican migrants work in the U.S. construction industry, a sector hit hard by the U.S. mortgage crisis.
Mexicans who rely on money sent home are also being hit with an 8 percent drop in the value of the U.S. dollar against the Mexican peso this year.