Tag: Economy

Business Models

What does recovery mean for Banks?

Colin Henderson

Banks are at the centre of the economy.  Business and consumers conduct their day to day business using money and they do this through banks.  Stating the obvious you may say?  This is why I study the economy so closely and try to understand how it will look in the future, because that has a direct relation to how banks will look in that future. We are in a crisis of debt.  It is a debt crisis because consumers and businesses are over-leveraged.  Their debt is too high relative to todays asset values.  Asset values have decreased by 25 – … Continue reading What does recovery mean for Banks?

Economy

World Bank updates Global economic prospects downward

Colin Henderson

This revised forecast shifts from 2010 recovery,to an uncertain 2010 recovery.  Read through for data and forecasts on your country. World Bank updates global forecast This update of the projections in the World Bank’s Global Economic Prospects report (GEP) of December 2008, reflects the rapid  deterioration in financial and economic conditions—and the increasingly negative interaction between weakening economies and fragile financial systems—that have come to the fore since late 2008 for virtually every country in the world. gep-update-march30-2009 PDF Continue reading World Bank updates Global economic prospects downward

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“These jobs aren’t coming back”

Colin Henderson

Finally the realisation is sinking in that this is no longer business as usual.  The economy will come out of this recession looking different. Job Losses Hint at Vast Remaking of Economy | NY Times The unemployment rate surged to 8.1 percent, from 7.6 percent in January, its highest level in a quarter-century. In key industries — manufacturing, financial services and retail — layoffs have accelerated so quickly in recent months as to suggest that many companies are abandoning whole areas of business. “These jobs aren’t coming back,” said John E. Silvia, chief economist at Wachovia in Charlotte, N.C. “A … Continue reading “These jobs aren’t coming back”

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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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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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World Economic Forum 2008 – long on rhetoric, short on options

Colin Henderson

The Forum is an intense 4 days, and this year probably more so than most – even folowing it by written word and video as I did was intense.  There were some clear themes, and some clear leadership from surprising sources.  The surprise was the Asian contingent and their discussion of global co-operation. Prime Minister Aso of Japan, Premier Wen of China, and Prime Minister Putin of Russia all summarised the crisis well, and spoke clearly about solutions comprising both domestic programs to boost GDP and consumption, and global co-operation to re-arrange global finance Tony Blair was another bright spot … Continue reading World Economic Forum 2008 – long on rhetoric, short on options

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Getting back to normal economic growth | we have it all wrong!

Colin Henderson

These two headlines tonight following the bank bailout and the auto bailout serve to validate my new view.  We are not going back to where we were.  Yet all activities of the governments’ to date are premised on the notion that after this hickup we will return to 1-2% annual growth in GDP reasonable interest rates, and increasing home prices. Who believes that now?  Where is the pragmatic thinking that plans for GDP at a fraction of what it was in 2007 ?  Where are the scenario plans for GDP at 75% and 50% of 2007 levels.  Such plans would … Continue reading Getting back to normal economic growth | we have it all wrong!

Economy, Uncategorized

Bank capital, economy, debt, and the true meaning of Jubilee

Colin Henderson

On the topic of Bank capital this chart embedded in Greenspans article shows just how much banks business model has evolved.  In economic terms this is the corollary to extreme business and personal debt. In the years following 1840 when bank capital was approaching 60%, as banks made loans, the borrower bought things that resulted in bank deposits which can then be lent again, and again.  The velocity of capital as it is know increased dramatically until 1940 and largely remained there – till now.  As banks re-capitalise the preachings of government to lend more is the ultimate paradox. Banks … Continue reading Bank capital, economy, debt, and the true meaning of Jubilee

Innovation, Uncategorized1 Comment

Bailout or buy some time while industrial disruption occurs for auto, banks and telco sectors

Colin Henderson

I have found myself reading more economics blogs over the last couple of years, trying to understand better what is going on and the impacts of the banking crisis. This blog, StumblingandMumbling is worth the subscription. It is insightful, and contrary enough to provoke thinking. It also happens to articulate things that I cannot help thinking about. Recession or Inflation targeting 2. The cost of recession isn’t just unemployment hitting a few hundred thousand, but the fear of unemployment hitting millions. But this fear exists even in normal times, because the job destruction rate is so high. The 25,000 jobs … Continue reading Bailout or buy some time while industrial disruption occurs for auto, banks and telco sectors