Category: Economy

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

Economy2 Comments

Reference material | New economic documents – world economy with country specifics (close to 1,000 pages here)

Colin Henderson

For your reading pleasure | very credible stuff here with the latest on statistics and reference.  Keep handy for that next strategy powerpoint.  I will add to sidebar for later reference too. IMF World Economic Outlook oct 2008 original link – IMF IMF World Economic Outlok – update Jan 2009 original link – IMF The Future of the Global Financial System – World Economic Forum 2009 original link WEF Annual Report 2008– World Economic Forum original link WEF Continue reading Reference material | New economic documents – world economy with country specifics (close to 1,000 pages here)

Economy1 Comment

Flawed assumptions about market theory | Stiglitz

Colin Henderson

There is a serious flaw in Stiglitz argument that market dynamics naturally fail.  In fact this is a serious flaw in many who today categorise the credit and banking crisis as one that is a result of trust in natural market dynamics. The truth is most of the individual mistakes boil down to just one: a belief that markets are self-adjusting and that the role of government should be minimal. Looking back at that belief during hearings this fall on Capitol Hill, Alan Greenspan said out loud, “I have found a flaw.” Congressman Henry Waxman pushed him, responding, “In other words, you … Continue reading Flawed assumptions about market theory | Stiglitz

Business Models, Economy, regulation

banking 101 | All banks are vulnerable to runs

Colin Henderson

This is a fascinating and insightful paper by Willem Buiter and Anne Sibert on the failure of the Icelandic banking system, but with scary parallels to the UK system and others.  In particular though, and of interest to everyone possibly is section 2.1 copied below in full.  It defines the generic vulnerability that all banks’ have to “run a on the bank” even in good times. Thus the argument goes, accept reality, nationalise the banks, and treat basic banking as a utility, just like water and electricity, until a better model can be developed that would have a better chance … Continue reading banking 101 | All banks are vulnerable to runs

Business Models, Economy5 Comments

The right idea for the times | UncrunchAmerica

Colin Henderson

The Canadian government, and governments in many countries remain concerned about consumer lending.  At the same time there is great concern about bank capital reserves, and ability to cover future loan losses that are expected to escalate.   This results in an impossible combination of mutually exclusive sets of activities.  Banks can either lend, or recapitalise, but its a fiction that they can do both.  This places banks in the position of being asked the impossible. What got me thinking about this was this site – uncrunchamerica.org which is listed here on change.org (and accepting votes too – feel free to vote). … Continue reading The right idea for the times | UncrunchAmerica

Economy

Was it China, or Alan Greenspan?

Colin Henderson

This  article is incredible in its insinuation by the head of Bernanke, Head of the Federal Reserve in the US. Chinese Savings Helped Inflate American Bubble | NY Times The problem, he said, was not that Americans spend too much, but that foreigners save too much. The Chinese have piled up so much excess savings that they lend money to the United States at low rates, underwriting American consumption. Lets think about that statement – consumers buy things, that are often manufactured abroad – those items contribute to imports that must be paid for and even though much of that … Continue reading Was it China, or Alan Greenspan?

Economy, Uncategorized

Significant shift in world trade settlements coming as China frees up Yuan

Colin Henderson

Another signal of changing times in world trade. implications of this shift will be far-reaching. China to allow freer yuan trades | BBC It means if the two parties to a trade have yuan available, they need not enter world exchange markets to pay. Most of China’s foreign trade is settled in US dollars or the euro, leaving exporters vulnerable to exchange rate fluctuations. Continue reading Significant shift in world trade settlements coming as China frees up Yuan