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US auto and bank crisis pulled together under Treasury Department | 15th Feb, 2009

Colin Henderson

In a fascinatingly shrewd move the Administration has tied the auto crisis and the banking crisis together by appointing a panel to oversee the “revamping” and that panel is chaired by Treasury Secretary Geithner – who obviously also has accountability for the banks. This makes eminent sense. To Fix Detroit, Obama Is Said to Drop Plan for ‘Car Czar’ | NY Times DETROIT — President Obama has dropped the idea of appointing a single, powerful “car czar” to oversee the revamping of General Motors and Chrysler and will instead keep the politically delicate task in the hands of his most … Continue reading US auto and bank crisis pulled together under Treasury Department | 15th Feb, 2009

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Some perspective on GDP, and America’s ability to “come back”

Colin Henderson

This is much talk these days of the decline of the United States and a fundamental reshaping of relative world economic clout. It is worthwhile to reflect on the current size of economies before such claims are made. This rambling piece from Richard Florida that I thought was going to deal with the decline of America, actually ends up making the case that the impacts on US cities will be significant.  Of that there is little doubt, but the example of Detroit may not be the best to make the point (the Phoenix example is a better one). Detroit has … Continue reading Some perspective on GDP, and America’s ability to “come back”

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Constructive Capitalism | Umair Haque, Director Havas Media Lab

Colin Henderson

Fascinating talk by Umair Haque at a conference in Sweden.  His topic is the future of business and the failure of business strategy.  it is long, but worthwhile.  Would love to get a hold of the deck, and if i do will attach. He speaks of new principles for corporate DNA:  and the Laws of Constructive Capitalism: Strategy is a commodity Competition is obsolete There is nothing more asymmetrical than an ideal Tomorrow is today Connections not transactions People not product Creativity, not productivity Outcomes, not incomes Advantage is in the DNA The next revolution is institutional Daytona Sessions Umair … Continue reading Constructive Capitalism | Umair Haque, Director Havas Media Lab

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Bank asset revlauation – unfortunately its the next mortgage crisis

Colin Henderson

In keeping with the theme that bank assets need to be properly valued before confidence can be returned to the system, this piece summarises the next immediate problem.  As you read this, bear in mind that the American system for most states employ the non-recourse system.  This little known implication just came known to me recently, and further explains the extent of the fear on bank asset value.  Non-recourse means the homeowner can walk away from a home where the mortgage exceeds the home value with no recourse from the bank back to that homeowner for the shortfall.  This is … Continue reading Bank asset revlauation – unfortunately its the next mortgage crisis

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G.M. is attempting to use the economic crisis as a smokescreen

Colin Henderson

The prediction from December is unfortunately coming true.  It is time for the politicians to open their eyes – GM was losing money in 2004, and essentially bankrupt in 2006.  those were the supposed good years.  The matter of GM is not a credit crisis matter, rather a matter of bad management, that deserves the obvious fate.  As far back as 2006 GM’s liabilities exceeded assets by $6bn.  By 2008 the deficit was $60bn. The company is attempting to use the economic crisis as a smokescreen for their own deficiencies, and failure to re-engineer. GM to Offer Two Choices: Bankruptcy … Continue reading G.M. is attempting to use the economic crisis as a smokescreen

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Time to accept reality, and value bank assets at their real value

Colin Henderson

This is yet another staggerring development that leaves only one simple and obvious conclusion. Bank assets must be valued to market value immediately.  The argument that the market cannot withstand the result which would of crouse imply enormous writedowns, probably beyond that which will be the ultimate result, but the argument to wait is no longer valid.  Banks have already been written down close to zero on the stock market in any event. Banks value their loan write downs based on historic data.  These times are an exception.  Time to predict based on locations, and job types – the result … Continue reading Time to accept reality, and value bank assets at their real value

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A future that has hope for banking innovation only in North America?

Colin Henderson

In something that is a bit ironic, the Democratic US government is looking the most conservative in management of banks amongst the G-7 scheduled next week in Italy.  Geithner is also looking the most thoughtful of the finance ministers, alongside Lagarde in France. This is seriously not a time for grandstanding as Brown and Darling continue to do too often.  Time to get it right with a sustainable approach that will not relegate banks to becoming permanent financial utilities which I fear is happening when you read this dire summary of the current state. Could we have a system in … Continue reading A future that has hope for banking innovation only in North America?

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Arrangement shelters ABCP worth 27% of Canadian Bank equity base

Colin Henderson

The always clear thinking Fareed wrote this piece on the Canadian Banking system and how it is the envy of the world.  The facts outlined are indisputable and the distinctions between the US and Canadian systems that favour care and moderation in Canada are all true. However there is one other event he does not mention, that has quietly gone on for the last 14 months and in fact just completed in January this year with the announcement noted below on the E&Y site dated Jan 21st, 2009. The story here goes back to December 2007, when I first noted … Continue reading Arrangement shelters ABCP worth 27% of Canadian Bank equity base

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France fears backsliding on regulation

Colin Henderson

Ms Legarde was a bright star and clear thinker at the recent World Economic Forum.  There is not yet broad agreement on the methodology and priorities amongs the countries as to resolve the global crisis. In another interview she offers some indication of how globalisation actually works, and the comparison of UK and US approaches is stark.  There is a long history between UK and France, and now is not the time to let that get in the way. Transcript – Christine Lagarde – Finance Minister – France | ft.com BH: Are they retreating in Washington and London? CL: I … Continue reading France fears backsliding on regulation

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US government signals significant control to be taken over banks

Colin Henderson

While short on specifics the message from Tim Geithner has enough clarity to indicate his direction.  The banks will have their assets revalued to market value, which means appropriate and sizeable write downs of assets.  This is a requirement in my view before confidence in banks will return.  Banks and in particular US and UK banks are over extended and to use an old word  ‘overtrading’.  They are producing far too much revenue on far too little a capital base. US rescue plan will need state to dig deep | ft.com When crises have hit other countries, US policymakers have … Continue reading US government signals significant control to be taken over banks