The credit crunch began over a year ago. But it took until yesterday, when the UK government part-nationalised the country’s banks. for a sensible policy response to begin to emerge. Today, the excellent Gillian Tett of the Financial Times pulls no punches in her assessment of what went wrong. She believes that ‘London does now […]
Chemicals and the Economy
Iceland calls in IMF
As the blog predicted, Iceland has been forced to call on the IMF for help. Finally, the country’s leaders have recognised that their $20bn economy couldn’t support the level of debt built up during the ‘go-go’ years. The pity is that it took them so long to recognise reality – and by then, any chance […]
A satirical look at the banking crisis
Readers may remember the satirical John Bird/John Fortune video on the causes of the housing crisis. Now the Financial Times Diary has provided a satirical view of the causes of the banking crisis: A new bank model 1) Take money from members of the public in savings accounts on pretext of keeping it safe 2) […]
The zeitgeist continues to change
The German word ‘Zeitgeist’ describes ‘the ethos or mood’ of a select group of people. Back in January, the blog noted a change underway in the financial zeitgeist. Today’s Wall Street Journal, normally a cheerleader for the financial community, provides a further example. After reviewing the losses to her personal portfolio, and considering how current […]
‘The time for piecemeal solutions is over’
The International Monetary Fund (IMF) has now increased its estimate of total sub-prime losses to $1.4 trillion, versus $945bn in April. It estimates banks will need to raise $675bn in new capital. And Dominique Strauss-Kahn, the IMF MD, has called for the major economies to respond to the credit crisis with ‘a collective commitment by […]
Blue skies disappear
A year ago, the blog was in a minority of one, with its forecast for 2008. Its heading was ‘Budgeting for a Downturn’. By contrast, the consensus post-EPCA was for $70bbl oil, debt market problems to be contained, and for chemical margins to remain at 2007 levels. This year’s EPCA mood was different. There was […]
Shell’s priorities for the gathering economic storm
In today’s difficult times, everyone looks to the majors for guidance on what is happening, and what it all means for the industry. So the blog welcomes the advice given by Graham van’ t Hoff, newly appointed VP for base chemicals at Shell, when he spoke to ICIS news at EPCA. He emphasised 3 areas: […]
Akzo halts share buybacks
The blog has long worried about the high levels of debt that have been incurred by some companies in recent years. So it applauds Akzo’s decision to halt its planned €3bn share back at the half-way stage. As Nigel Davis notes in ICIS insight, Akzo has a very strong balance sheet, and its ‘gearing is […]
Bailout passes, Wall Street falls
‘Buy on the rumour, sell on the news’ is the classic definition of a weak market. So the US stock market’s reaction to the passing of the US bailout is a worrying indication that further problems may lie ahead. On 19 September, the Dow rocketed to 11388 as the bailout was confirmed. Last night, as […]
Iceland on the brink
Last March, the blog noted an excellent article on Iceland by Gillian Tett of the Financial Times. She argued that Iceland was ‘the first country run like a hedge fund’. And she worried that its banks might prove not ‘too big to fail’, but ‘too big to rescue’? Now, it looks as though we are […]
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