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USA adds $746bn to support housing

Housing, as we know, is an absolutely key market for the chemical industry, both directly and indirectly. Directly, each new house accounts for $16k of chemical demand, whilst indirectly, years of rising western house prices has allowed consumers to cash out their gains to spend on Asian imports. Now this virtuous circle has turned with […]

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2008 economic outlook

Yesterday the European Central Bank opened its doors and lent €349bn to 390 banks seeking to shore up their reserves position for year-end. Will this help solve the credit crunch? Writing today in the Financial Times, their excellent banking editor (Gillian Tett) is doubtful. She worries that ‘the banks know something nasty that we don’t’, […]

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Dow integrates upstream via Kuwait deal

Dow has been unique amongst the world’s largest petchem companies in not being integrated upstream into oil and refining. This position will change dramatically at the end of 2008, when its newly-announced JV with the PIC subsidiary of Kuwait Petroleum opens for business. Not only will Dow then integrate its ethylene/PE business, but it will […]

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Chemicals & the Economy – the first 6 months

It is now almost 6 months since I started writing this blog. And I thought you might like some feedback on how it is developing. As you can see from the green-shading on the map, it is now read in almost all of the major chemical producing/consuming areas. A high proportion of readers bookmark the […]

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Another day, another $17bn

News that UBS, the major investment bank, has had to follow Citigroup in raising new capital in a hurry, will have added to the CFO concerns I describe below. Massive subprime losses have forced both banks to raise a combined $24.5bn in the past fortnight. Both had previously said that their losses would only be […]

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CFO pessimism increases

CFOs are paid to worry, but their worries seem to be increasing quite rapidly, according to the results of the quarterly CFO survey by Duke University/The Economist. This showed: • Record pessimism about the US economy, with US CFOs worrying about ‘weak consumer demand, high fuel costs, rising labor costs and credit markets’. • European […]

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A satirical look at the subprime debacle

A reader has kindly sent me a YouTube link to a recent British television sketch featuring two masters of satire, John Bird and John Fortune. It takes the form of a mock-interview, with Bird playing the all-wise investment banker, and explaining to Fortune how subprime happened, and what a SIV might be. Not only is […]

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Asia ‘Recouples’

The major investment banks have changed their minds about the potential for Asia to ‘decouple’ from any credit-crunch induced downturn in the West. Originally, they had believed that domestic demand in China and elsewhere would enable the Asian economy to sail ahead, no matter what happened elsewhere. I was a bit sceptical of this hypothesis, […]

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Credit markets ‘worst in 47 years’

Central banks seem to have their work cut out if they are to restore normality to global credit markets. The famed head of Legg Mason, Chip Mason, who manages over $100 billion of assets, and is one of the world’s largest money managers, said yesterday that ‘credit markets are in the worst state he has […]

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UK housing lenders shut the door too late

The UK has a proverb about how stable doors only get shut after the horse has run away. We can see this happening in the UK housing market. The main regulator (the FSA) failed to spot the Northern Rock problem before it led to the UK’s first bank run in 140 years. Only now has […]

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