Category: Economy

Economy, Japan

How much do we understand the meaning of less GDP now and forseeable future

Colin Henderson

The fall in GDP for Japan appears nothing short of catastrophic, yet on a visit there last week by Nobuyo, the effects of this change are not obvious to the everyday Japanese person. One change that was noticeable in Tokyo is less foreigners (Gaizin).  The area around Roppongi and Azabajuban is normally where one can expect to see many western faces in the restaurants and bars.  No more.  Companies such as Lehman Brothers, Merrill Lynch, and AIG as well as numerous other western financial services companies had representation in Japan, however that is quickly shifting. This still does not appear … Continue reading How much do we understand the meaning of less GDP now and forseeable future

Economy

The power of positive thinking from Deutsche Bank

Colin Henderson

This is a very sensible article by Neil Hume at the FT.  He notes the extraordinary growth in bank stock prices since the infamous CitiBank memo in March, wherein he basically pronounced the worst as over, because he had removed the bad people, was instituting new processes, and working with Government. What struck me is this quote from an analyst at DB (emphasis added) On London: Banks’ rehabilitation could take time Add it all up, and the reason banks have rallied is investors are no longer worried about nationalisation and are prepared to look through two years of rising bad … Continue reading The power of positive thinking from Deutsche Bank

Canada, Economy

Bank of Canada Monetary Policy Report Apr 2009 sees economy worse that projected, but consumer credit is growing

Colin Henderson

Bank of Canada has released its quarterly Monetary Policy report.  It is useful here in the context of Canada and the impact on consumers, particularly as Canada has been painted as being in better shape than other countries.  Consumer confidence represented by purchasing is down, but consumer credit is still growing at a slower pace.  They question will be to what extent credit defaults arise over upcoming months. Speech and Report: Global industrial production has fallen sharply … … and Canadian GDP has fallen sharply too, and worse than predicted earlier .. … while the Canadian hit on wealth has … Continue reading Bank of Canada Monetary Policy Report Apr 2009 sees economy worse that projected, but consumer credit is growing

Economy1 Comment

Loan losses could reach $4 trillion | requires additional bank capitalisation of up to $725 bn

Colin Henderson

The IMF has released its semi annual Global Stability review, that few paid attention to before, but now has much increased visibility.  In particular this week, with Geithner about to release the results of the bank stress tests, this pre-empts the Fed leaving much little room to manoeuvre in understating the outcomes. Bottom line – the IMF sees $ 2.7 Tn in US based originated write offs and $ 4 Tn in total write offs, with banks absorbing 2/3 of that. IMF Global Stability Review – April 2009 Without a thorough cleansing of banks’ balance sheets of impaired  assets, accompanied … Continue reading Loan losses could reach $4 trillion | requires additional bank capitalisation of up to $725 bn

Economy

World Bank updates Global economic prospects downward

Colin Henderson

This revised forecast shifts from 2010 recovery,to an uncertain 2010 recovery.  Read through for data and forecasts on your country. World Bank updates global forecast This update of the projections in the World Bank’s Global Economic Prospects report (GEP) of December 2008, reflects the rapid  deterioration in financial and economic conditions—and the increasingly negative interaction between weakening economies and fragile financial systems—that have come to the fore since late 2008 for virtually every country in the world. gep-update-march30-2009 PDF Continue reading World Bank updates Global economic prospects downward

Economy

Transparency pledge in bank stress tests – now May 2009

Colin Henderson

Confusing messages coming out on the timing of the Bank stress tests – now expected May. Transparency pledge in bank stress tests | FT The White House on Wednesday pledged “transparency” over the stress tests used to assess the health of the biggest US banks, as officials pushed wary banks and regulators to agree to disclose as much information as possible. Robert Gibbs, US presidential spokesman, said that “early in May” there would be “transparency of determining and showing to all involved some of the results” of the tests. Continue reading Transparency pledge in bank stress tests – now May 2009

Economy

A lesson from Japan in management of toxic assets planning

Colin Henderson

Christian Caryl points out just how little Japan is both misunderstood and underestimated, particularly with regard to the 1989 bubble economy.  Feel free to read at your leisure. Mr  Koizumi government too charge in getting the banks to clean up their act, and after that the economy responded with remarkable speed. By contrast, the present U.S. slump is the result of a culture of financial profligacy that enmeshed consumers and homeowners as well as major financial institutions This lesson is one that must be considered as the PPPIP (Geithner) plan is implemented in the US, and European governments should take … Continue reading A lesson from Japan in management of toxic assets planning

Economy

We came very close to a global financial meltdown | Bernanke

Colin Henderson

Just caught this during Bernanke testimony to the House Finance Committe.  Rep. Kanjorski asked Bernanke to confirm the events of Sept 18th (refer video below) following tghe collapse of Lehmans and the impact on the world financial system. Bernanke responded (quote): “… the actions we (Bernanke/ Paulson) took averted the collapse of the global financial system.  We came very close to a global financial meltdown” Tracking the evolution of financial institutions? Sep 18th 2008 | Russian Missile Crisis – banking crisis version Continue reading We came very close to a global financial meltdown | Bernanke

Business Models, Economy2 Comments

The Great Unwinding | part 2 of 3: 2012 – 2020 of 3

Colin Henderson

Part 1 of this series was a dire assessment leaving doubts about of survival at all.  It was a broad brush assessment of the crisis to date and directions being taken.  However there will always be winners and losers.  The future is rarely linear, and out of this mess some will raise sooner, and in ways that are unexpected. The report, The Future of the Global Financial System deals with this unpredictable future by outlining four scenarios that encapsulate the broad sets of potential directions that will occur in the worlds banking ecosystem.  As with Part 1 the research used … Continue reading The Great Unwinding | part 2 of 3: 2012 – 2020 of 3

Economy, Innovation9 Comments

The Great Unwinding | part 1 of 3: 2009 – 2012

Colin Henderson

This will be series of posts focussed on the current state of banks, the impact of the banking crisis on banks, and future scenarios for banks 2009 – 2020.  This is no longer banking as usual.  The research used to source is primarily from The Future of the Global Financial System together with supporting data from G20, and IMF.  I also acknowledge strong influences from Niall Fergusons “The Ascent of Money” and his other writing here at the Financial Times plus John Mauldins pragmatic view of the world. The WEF and IMF reports are stored on the blog here.  The … Continue reading The Great Unwinding | part 1 of 3: 2009 – 2012