Tag: Economy

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

Economy1 Comment

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

Uncategorized

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

US

Abandoned Schools in Detroit | no sign of recovery here

Colin Henderson

I have mentioned more than a few times my belief that recovery is not a return to 2007. The new normal will create damatic shifts and new paradigms for bank planning. Detroit gets picked on a lot …. but these pictures are not pictures of a temoorary set-back. Prepare to be disturbed. This might go some way to explain why houses in Detroit can be purchased for as little as $5K. Abandoned Schools in Detroit Researched by Nobuyo Henderson Continue reading Abandoned Schools in Detroit | no sign of recovery here

Economy1 Comment

Financial markets did not detect the deterioration of structural productivity trends in the early 2000s early enough

Colin Henderson

A fascinating analysis of economic conditions prior to 2007, sugesting that dropping productivity and the concurrent increase in asset prices contributed at least in part to the economic crisis, yet was not picked up by the market. Productivity and the crisis: Revisiting the fundamentals | Vox Most narratives of the crisis start with problems in the financial sector that then spilled over into the real economy. This column looks at the real side first and shows that labour productivity growth declined significantly in the years prior to the crisis, particularly in the US construction sector. Financial markets may have failed … Continue reading Financial markets did not detect the deterioration of structural productivity trends in the early 2000s early enough

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China continues to display economic strain that will reflect on world economy

Colin Henderson

In the ‘how is the world doing’ category, this take (from the chairman of Morgan Stanley Asia and author of ‘The Next Asia’ (Wiley), due out in September) on China is consequential for us all. The west imported cheap labour from there for the 15 years preceding 2007, and the after effect is coming home to roost. What will matter to us all, and to banks, is the relative impacts on currency values as the historic imbalances are rebalanced to a different metric. I have to keep going back to how banks in the west redesign their products and services. … Continue reading China continues to display economic strain that will reflect on world economy

Economy

Is China the next Lucent?

Colin Henderson

This is an interesting article over at Foreign Policy. It is interesting because it fits in the meme of what recovery looks like. Regular readers will by know by now I am firmly in the space that recovery will be framed by a smaller economy, and slower growth of that smaller economy. This piece compares the Chinese economy to Lucent during the dot com bubble. Lucent were selling to dot com company’s which disappeared. China was selling to US and to a lessor extent European consumers who have … disappeared. The minor distinction is that the consumers actually still exist, … Continue reading Is China the next Lucent?

Economy

Plan for Sound Banking – Conservative White Paper | analysis

Colin Henderson

Here is more on the Tory plan for banking outlined in the attached White Paper [57 pages]. Politics aside, lets take a look at the merits of this proposal and how it aligns with the problems I have perceived within banking and that are exacerbated over the last 2 years. The core issues I have seen are these: banks have become high dividend paying conduits due to protective regulation and tight association with Central Banks the regulatory protection produced a ‘cannot fail’ mentality about banks’ and .. this in turn resulted in no perceived need for a strong capital base, … Continue reading Plan for Sound Banking – Conservative White Paper | analysis

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The Good, the Bad and the Ugly | which is your bank?

Colin Henderson

In this video commentary on the US Banks results they note that while large profits are announced, any parts of the business related to the US consumer consumer is flat. This includes all retail banking and credit cards. The only bright spots are the fee based revenue from the investment banking units, hence JP Morgan and Goldman Sachs results, although poor old Citi did not even make it there. One quarter does not make or break anything in banking in and of itself. However the predictions of Roubini and Baker linked below are playing out as expected, so which banks … Continue reading The Good, the Bad and the Ugly | which is your bank?

Economy, US3 Comments

China and America economic future – Ferguson/ Fallows debate

Colin Henderson

A summary in NYT of the fascinating Ferguson/ Fallows debate at Aspen on the economic relationship between China and US. Ferguson: US and China are divorcing economically.  China will focus on internal consumption, not exports.  “Depreciation (of US $) is inevitable and the Chinese are working to end the dollar’s role as the world’s reserve currency.” Fallows: “…  doesn’t know what the future will hold, but he believes that Chinese officials still see the dollar as their least risky investment. Domestically, China will not turn democratic, but individual liberties will expand. He agreed that China and the U.S. will dominate … Continue reading China and America economic future – Ferguson/ Fallows debate