Tag: Economy

Economy

Bank of Canada joins other Central Banks is calling for caution

Colin Henderson

In the regular Monetary Policy Report the Bank of Canada keeps their focus on a low interest rate environment right through 2010. On inflation the view is mixed … The main upside risks to inflation relate to the possibility of a stronger-than anticipated recovery in the global economy. A stronger global recovery would be transmitted to Canada via trade, financial, confidence, and commodity price channels. There is also the risk that Canadian domestic demand could be more robust and have a more sustained momentum than projected. On the downside, a stronger-than-assumed Canadian dollar, driven by global portfolio movements out of … Continue reading Bank of Canada joins other Central Banks is calling for caution

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A succint comparison of exiting 1980 recession, and 2009 recession

Colin Henderson

I thought this a particularly succinct view of the next 10 years view prospects for banks and their business planning. The view from New York | Buttonwood/ Economist The bearish view came from Josh Rosner of Graham-Fisher. Mr Rosner was one of the first analysts to spot the potential havoc caused by the interaction between subprime mortgages and structured products like CDOs. He thinks the economy will not rebound as it did in the 1980s. Demographic trends are not as favourable (the baby boomers were entering their prime earning period in the 1980s; now they are retiring); while credit card … Continue reading A succint comparison of exiting 1980 recession, and 2009 recession

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Mervyn King calls for banks’ break up per “The Great Unwinding” post in Feb

Colin Henderson

It is with some relish I see Mervyn King agreeing with me from last February. King calls for break-up of banks | FT – Oct 2009 Mervyn King, governor of the Bank of England, called on Tuesday night for banks to be split into separate utility companies and risky ventures, saying it was “a delusion” to think tougher regulation would prevent future financial crises. The Great Unwinding | part 1 of 3: 2009 – 2012 | The Bankwatch – Feb 2009 This will effectively split the financial community into two distinct sets: financial utilities – significant operating restrictions in light … Continue reading Mervyn King calls for banks’ break up per “The Great Unwinding” post in Feb

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Bank retail operations have not recovered despite profits

Colin Henderson

In this piece at the NY Times, Krugman points out the obvious that despite profits, Banks’ retail operations have not recovered. The large profits we are hearing about are all centred in the Investment Banking units. I would add that it will take more than a turnaround in consumer confidence and reduction in unemployment. It will also take time to work through the de-leveraging impacts of consumer desire to reduce debts and save more for future crises while this one is firmly in peoples minds. For everyone who is still working they know of someone who is not, and that … Continue reading Bank retail operations have not recovered despite profits

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US deficit reaches world record levels, and rising

Colin Henderson

US deficit is now in Botswana and Russia territory in terms of record levels relative to GDP. The argument that this is not inflationary sounds to me like pushing water uphill. $1.4 Trillion Deficit Complicates Stimulus Plans WASHINGTON — The Obama administration said Friday that the federal budget deficit for the fiscal year that just ended was $1.4 trillion, nearly a trillion dollars greater than the year before and the largest shortfall relative to the size of the economy since 1945. http://www.nytimes.com/2009/10/17/us/17deficit.html?_r=1&th&emc=th Continue reading US deficit reaches world record levels, and rising

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The Economist Special Report on the World Economy coins the term ‘Gandhian Banking’

Colin Henderson

Under the heading ‘Gandhian Banking’ The Economist reveals the extent of worldwide government injection into banks at $432 billion by this spring and guaranteed bank debts at $4.65 trillion. Of perhaps even greater significance is the implicit guarantee that now exists for all banks. By this summer 33 American banks had repaid the capital the government had injected into them. The new era of state ownership seemed to be passing almost as quickly as it had arrived. But the state still has a large stake in the financial system beyond its explicit ownership of shares. It now owns the risk … Continue reading The Economist Special Report on the World Economy coins the term ‘Gandhian Banking’

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Google Internet Stats

Colin Henderson

Although on the co.uk domain only, this is a very useful new site from Google. One to save for future reference. Google Internet Stats This Google resource brings together the latest industry facts and insights. These have been collected from a number of third party sources covering a range of topics from macroscopic economic and media trends to how consumer behaviour and technology are changing over time. HT to ReadWriteWeb Continue reading Google Internet Stats

Economy

Canadian Banks have a Productivity Gap relative to the US

Colin Henderson

Following up on the previous post covering the Bank of Canada’s view that Canadian Banks do not have a productivity gap [pdf 19 pages] relative to US Banks, here is the basis for that contention within a 2006 report. The conclusion copied here in whole is in my view, woefully misleading and contradictory. It reads to me like someone with political motivations has turned facts into something that meets policy objectives. Analysis to follow. This work examines the efficiency and productivity of Canadian and U.S. banks in three ways. First, we compare key performance ratios and find that (i) the … Continue reading Canadian Banks have a Productivity Gap relative to the US

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The Canadian Economy Beyond the Recession | Bank of Canada

Colin Henderson

In this talk at Kingston last Tuesday, Tim Lane, Deputy Governor Bank of Canada lays out a quite lucid view [ 9 pages] of the opportunities and challenges facing Canada in recovery. Highlights: labour productivity and output is the fundamental challenge that existed before and will continue post recession the size of the working population is to decrease significantly for demographic reasons, and neither immigration nor baby boomers remaining longer in the workforce will significantly alter that prediction the financial services industry is critical to Canada at 20% of the economy Canadian producivity has been dropping because of insifficient investment … Continue reading The Canadian Economy Beyond the Recession | Bank of Canada

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The Role of Financial Services in the Economy

Colin Henderson

A debate ensues in UK and to some extent in France, on the issue whether the financial sector is an underpinning of the economy, or a destabilising factor to the economy. The debate is quickly moving to new taxes on transactions, but its unclear to me why that would solve either side of the debate, rather than merely be passed on to customers. City regulator seeks to deflate financial sector with global tax | FT … … a “swollen” financial sector paying excessive salaries has grown too big for society Continue reading The Role of Financial Services in the Economy