Back in April, the blog suggested that capital controls might remain for rather longer in Cyprus than the “few days or weeks” suggested by the central bank. And a month later, the bank was still unrealistically claiming they would be lifted “as soon as possible”. Today, the blog’s own view that they could be in place “for […]
Chemicals and the Economy
Investors pay Switzerland to borrow from them
2 years ago, Italy was paying 3.82% to borrow for 10 years (red column). Spain was paying 4.11%. These rates were similar to the UK’s 3.07%. A year ago (blue column), the world was clearly changing. This led the blog to introduce the concept of the JUUGS (Japan, UK, US, Germany, Switzerland), as a ‘safe […]
‘Moving forward in volatile times’ the motto for H2
The chemical industry has a long track record as a leading indicator for the global economy. Its position in the value chain means that it sees what is happening upstream in energy markets, and downstream in consumer markets. Anyone studying Q2 results will therefore be concerned about the outlook. This is a major shift from […]
EU banks cut lending to the PIIGS by 23% of GDP
On 7 September 2008, in its now famous warning that a financial crisis was imminent, the blog noted that “‘Deleveraging’ is an ugly word, and it has ugly implications“. The chart above shows just how ugly these implications are becoming for the PIIGS countries (Portugal, Italy, Ireland, Greece, Spain). It is based on data produced […]
“This is far worse than the banking crisis of 2008”
Long-standing readers will remember that then-UK Finance Minister Alastair Darling was the first Western politician to recognise in August 2008 the disaster that was about to hit financial markets. Now out of office, his warning today therefore deserves the widest possible discussion around the world: “I despair of the way in which EU leaders are […]
2012 Budgets
The blog will publish its fifth annual Budget Outlook next weekend. As usual, it is therefore time to review last year’s Outlook. Past performance may not be a perfect guide to future outcomes. But it is one of the best that we have. The blog’s 2008 Outlook ‘Budgeting for a Downturn’, and its 2009 ‘Budgeting […]
EPCA attendees worry about China slowdown
China was understandably a key item on most people’s minds at this week’s annual EPCA (European Petrochemical Association) meeting in Berlin. It has been the motor of global chemical demand growth over the past 3 years. The blog’s discussions identified a number of signs that this support may be disappearing: • Many companies worry about […]
US housing markets could weaken further
US housing was the prime cause of the current financial crisis. US banks spent most of the 2000-7 period lending at low ‘teaser’ rates to borrowers who had no prospect of repaying the loan. And by syndicating the loans to gullible European banks, they ensured that losses were shared equally, when credit standards finally began […]
“Impatience can ruin a whole life”
Anyone running a chemical company knows that the benefits of certain key decisions can take years to develop. Many companies had to support their nascent pharma businesses for 20 years, before steady profits began to flow. Whilst major complexes can easily take 10 years from inception to completion. Yet in recent years, investors have become […]
5 tips for surviving a period of deflation
The blog has been revisiting the Bank of England’s 2008 analysis of the likely impact of the financial Crisis. This reviewed 33 banking crises between 1977-2002 and found that: • The average length of each crisis was 4.3 years • The median loss of GDP was 7.1% • Major crises (such as today’s) caused GDP […]
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