The first-ever G-20 meeting of Heads of State was a relatively quiet event, without the presence of President-elect Obama. Two main areas seem to have been discussed: • Regulatory reform, where finance ministers have been given until the end of March to work out new rules for the world’s financial markets • Fiscal stimulus, where […]
Chemicals and the Economy
Bank of England warns on deflation
The UK’s Finance Minister said today that interest rates might need to be cut “to an unprecedented zero”. And the Bank of England warned there is a real “risk of persistent and damaging falls in prices”. Deflation would be a major challenge for chemical companies, for two main reasons: • Demand is deferred, because prices […]
Bank of England cuts to 3%, warns on deflation
UK interest rates have just been cut by 1.5% to 3%. They were last at this level in 1955. The Bank of England had been very concerned about inflation, currently at 5.2%, compared to a target of 2%. But the Bank now sees no danger from inflation in the future. Instead, it is warning that […]
GM – “time is very short”
Earlier this week, the blog noted GM’s dire October performance, with its US sales down 45% on last year, following the ending of its price promotions. Now, Roger Altman, the former US Treasury official who is advising GM on its loan application, has told Bloomberg “time is very short” to avoid its collapse. Normally it […]
Obama wins, Bush stays in office
Sen. Barack Obama duly won a landslide victory in yesterday’s US Presidential election, but will not take office until 20 January. I suggested last month in ICB, that “this delay, at such a critical moment, is not good news for chemical companies or for their customers”. The blog therefore congratulates the new President, and expresses […]
‘Financial panic’ over? Fed lends direct to companies
The US Federal Reserve is now bypassing the banking system, and dealing directly with major corporate borrowers. These have been cut off from many sources of credit, as banks hoarded their cash. The impact has been immediate, with 1500 transactions already done for a record $67bn – 10 times last week’s daily level. This should […]
The lighter side
Last week, the Financial Times tried to lighten the current mood of doom and gloom. It began a letters page discussion about the merits of humour as an antidote to panic. Many blog readers clearly enjoyed the recent posting ‘A new bank model’. They will therefore understand why the FT today carries the blog’s suggestion […]
US to help homeowners
There are welcome reports this morning that the US government is finally putting in place measure to help homeowners in danger of foreclosure. The FDIC (Federal Deposit Insurance Corp) has developed guidelines that will “lower a loan’s interest rate, extend the life of the loan or defer payment on a portion of the principal”. The […]
Regulators discover gambling in casinos
Last week, the blog didn’t know whether to laugh or cry when Alan Greenspan told Congress that he was “in a state of shocked disbelief” to find that that his self-regulation policy for banks had failed. Gretchen Morgenson of the New York Times was similarly surprised to discover the former Chairman of the US Federal […]
Sentiment, fundamentals….and panic
Sometimes markets move because of sentiment, sometimes because of fundamentals. Sometimes (luckily rarely), because of blind panic. The latter is what we are seeing at the moment. Investors suddenly feel they MUST sell – whether because they need the cash, have completely lost confidence, or because their family and friends are advising it. Whatever the […]
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