Tag: Economy

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Biggest Contraction since 1921 | NIESR UK

Colin Henderson

This new piece of analysis from NIESR (UK) makes the point based on prior recessions, that 20 – 30 months are left, at a minimum, before we get close to where GDP was before this recession period began. This point gets lots when the only measurement that media speak of is the last quarters +/-. What matters is where we are relative to where we began, and there a long way to go. http://www.niesr.ac.uk/ Our monthly estimates of GDP suggest that output grew by 0.3 per cent in the three months ending in December, following on from a growth of … Continue reading Biggest Contraction since 1921 | NIESR UK

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Bank of Canada notes consumer credit remains a risk

Colin Henderson

Despite the general view that Canada and its banks is in relatively better condition that international peers, down side risks remain, and are relatively unchanged since Jun 2009. This statement sums that up, and introduces a key point about this crisis and how little has been done to prevent re-occurrence. Bank of Canada Financial System Review Despite notable improvement in funding markets, funding and liquidity constraints remain an important area of vulnerability. Should a negative shock occur, such as a renewed downturn in the global economy or a loss of investor confidence, funding and liquidity pressures would likely reappear relatively … Continue reading Bank of Canada notes consumer credit remains a risk

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‘The Shape of Business – The Next 10 years’ | CBI

Colin Henderson

Confederation of British Industry (CBI) have issued this paper. It is a short but useful discussion on what business ought to consider in the UK, but my reading suggests most western economies. It touches on the main categories of concern of business, people issues, environmental, partnerships, supply chain and technology Here is an excerpt from the Table of Contents, followed by the conclusion. Download: The shape of business – the next ten years (PDF 2MB) | CBI The Changing Business Environment Changing finance and capital conditions The decline of trust in business and markets A less benign macroeconomic environment Social … Continue reading ‘The Shape of Business – The Next 10 years’ | CBI

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“Rally fuelled by cheap money brings a sense of foreboding” | ft.com

Colin Henderson

Gillian Tett voices her concerns here, based on background discussions with bankers. We are not out of the woods yet, despite the equity markets. Rally fuelled by cheap money brings a sense of foreboding | FT Yet, if you talk at length to traders – or senior bankers – it seems that few truly believe that fundamentals alone explain this pattern. Instead, the real trigger is the amount of money that central bankers have poured into the system that is frantically seeking a home, because most banks simply do not want to use that cash to make loans. Hence, the … Continue reading “Rally fuelled by cheap money brings a sense of foreboding” | ft.com

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’