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

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Nikkei slides impact Japan megabank equity position

Colin Henderson

The global economy is impacting Japanese banks in a different way.  Due to the practice of holding stock in their clients the reduction in the stock market is impacting their balance sheet values and driving them to raise additional capital. Nikkei slides | Reuters TOKYO (Reuters) – As Japanese stocks slide toward a 26-year low, the country’s big banks may soon need to raise more capital and could go cap in hand to the companies whose weak shares triggered the problem in the first place. Tokyo’s three “megabanks” — Mitsubishi UFJ Financial Group, Mizuho Financial Group and Sumitomo Mitsui Financial … Continue reading Nikkei slides impact Japan megabank equity position

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“Eat the Wealthy”.

Colin Henderson

Everyone has become an economist over the last year.  Now it appears we can add historian to the list of armchair expertise, with references to the overthrow of the rich and oppressive in the course of the French Revolution.  First out was the Economist yesterday with Delacroix Liberty on the cover, with Wall St cleverly overlayed in the background. This latest is the paraphrasing of the wrath felt by US citizens, exemplified in Barney Franks House committee hearings.  That wrath is for the blood of bankers, who seemingly glide around the world in 20 million dollar jets, gathering multi million … Continue reading “Eat the Wealthy”.

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We are all Sisyphus

Colin Henderson

Tett uses Greek metaphors to describe the task G20  and the world needs to realise in terms of the size of the task. Sisyphus was a king sentenced to the punishment of pushing a stone uphill, only to watch it roll back down, and having to repeat the process. As announcements and estimates of the bad debt problem have appeared, the accompanying fix has been drowned out by every new and escalating estimates.  This is the core of the banking crisis that must be addressed, by multiple strategies. In this case I believe that the average person is represented Sisyphus, … Continue reading We are all Sisyphus

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The hush hush work going on in the banks’ to correct matters

Colin Henderson

In the back rooms of the large banks, capitalism is alive and well.  Financial engineers, those very same folks who created the derivatives and CDO’s are busy addressing the problem, leaving glimmers of hope that hte reason for the banks’ relative silence is that they own the problem and will fix it.  Banks and bankers are nothing if not resilient. Bankers find new focus amid the rubble | Financial Times Many of them are now engaged in financial restructuring, which involves dealing with toxic assets and freeing up or protecting capital. But they will not get fanfares in earnings reports … Continue reading The hush hush work going on in the banks’ to correct matters

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Does G20 plan ensure bank nationalisation for weak banks in the near term?

Colin Henderson

The G20 summit is over, and the results produced here.  So what are the outcomes relative to banks, and relative to my earlier assessment of the future of banks;  are there any new clues to the future of nationalisation, bank independence and scope for bank innovation? http://www.g20.org The first nuance is the sub title in the Communiqué relative to bank regulation.  It has been amended from the draft version earlier in the week, from “Reforming financial systems for the future” to the final version “Strengthening financial supervision and regulation”.  This softening is deliberate, and suggests differences between countries as to … Continue reading Does G20 plan ensure bank nationalisation for weak banks in the near term?

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G-20 Working group 1: Enhancing sound regulation and strengthening transparency

Colin Henderson

The G20 in London released the official working paper on financial regulation today here, along with other working papers. Working groups G-20 Working group 1: Enhancing sound regulation and strengthening transparency (PDF file, 698KB) G-20 Working group 2: Reinforcing international cooperation and promoting integrity in financial markets (PDF file, 548KB) G-20 Working group 3: Reform of the IMF (PDF file, 311KB) G-20 Working Group 4: The World Bank and other multilateral development banks (PDF file, 194KB) Local copy of regulation doc follows [pdf] g20-enhancing-sound-regulation-and-enhancing-transparency-final Continue reading G-20 Working group 1: Enhancing sound regulation and strengthening transparency

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“Hold your nose, however. Mr Geithner’s proposal is worth a try” | Geithner

Colin Henderson

This weeks leader in the Economist sums up my perspective well.  Its not great that taxpayers have to include those pesky Wall Street types in the scheme to sort out the Banks, but its better than all the alternatives of  flat out bankruptcy, flat out nationalisation, or doing nothing.  Each of those three alternatives have significant knee jerk ramifications for US and the world economies. Banks, and particularly US banks are perceived to be over-valued on their assets, and no amount of debate can cure that impression now.  With asset values down by 60% (Equities) to 30% (real estate) its … Continue reading “Hold your nose, however. Mr Geithner’s proposal is worth a try” | Geithner

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“But the big ‘if’ is the speed of the cleaning up of [bank] balance sheets”

Colin Henderson

The head of the IMF continues to rightly focus on the need to clean up bank balance sheets.  To ignore them remains a central cause of lack of confidence which will hinders economic prospects due to the uncertainty caused by doubtful asset values. The more reason to adopt and move forward with Geithners measures right away. Hard times call for hard measures | Financial Times While there is no doubt that the forces for recovery are powerful, risks remain. Dominique Strauss Kahn, managing director of the IMF, told the Financial Times yesterday he expects recovery during the first half of … Continue reading “But the big ‘if’ is the speed of the cleaning up of [bank] balance sheets”

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Skype to launch service for iPhone, BlackBerry

Colin Henderson

Skype are now planning to offer their internet phone service for blackberry as well as iPhone.  It appears it only works on WiFi but it is a significant step towards our little devices becoming more like internet devices rather than phones. Skype for Blackberry and iPhone | Reuters NEW YORK (Reuters) – Skype, the Internet telephone unit of eBay Inc, is planning to launch its service for iPhone users on Tuesday and for BlackBerry in May as part of its effort to expand beyond desktop computers. Continue reading Skype to launch service for iPhone, BlackBerry