The vicious circle

Paul Tucker of the Bank of England has consistently warned about the dangers posed by the credit crunch to the global economy. Back in December, he identified the key issue as being that central bankers ‘must try to avoid a vicious circle in which tighter liquidity conditions, lower asset values, impaired capital resources, reduced credit […]

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Contingency planning for a global downturn

If you would like to read my article in this week’s ICB, on the importance of contingency planning, please click this link

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Shell, BASF, ACC warn on US downturn

‘The sharp drop in housing starts and the developing credit crisis will flow into the cracker business’, according to Shell Chemical’s CEO Stacy Methvin. She added that ‘the housing crisis is more far-reaching than anyone anticipated’. Similarly, BASF is now more cautious about the potential impact of the US recession on its petchem business. Peter […]

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US auto sales fall again in Q1

Car sales are of major importance to the chemical industry. The ACC calculates each new car uses $2441 worth of chemistry. The declines reported below for March and Q1 do not, therefore, make pretty reading. March Q1 GM -13% -11% Toyota -3% -4% Ford -14% -9% Chrysler -19% -16% Even more discouraging is that none […]

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IMF expects low growth, high inflation

The IMF now sees a 25% chance of a world recession this year, in which global growth would fall below 3%. Its base forecast is just 3.7%, compared to 5.2% before the credit crunch began. Sales growth for most chemicals is tied to GDP growth, so companies should expect volumes to come under pressure as […]

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Current account deficits start to matter

The US Fed’s decision to keep cutting interest rates is causing a major change in Asian investment behaviour. This will slow world economic growth quite significantly, and is bad news for chemical industry sales. It also means that the informal Bretton Woods II system of currency management has broken down.

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Shanghai stock market crashes

China is well worth watching at the moment. Quietly, away from the headlines, the Shanghai stock exchange has been collapsing. It is now down 44% since its October peak, and fell over 5% on Wednesday. This matters to the chemical industry for two reasons: • The immediate cause of Wednesday’s fall was news that Sinopec […]

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‘Too big to rescue’

Readers will know that I am a great admirer of Gillian Tett’s analyses of banking issues in the Financial Times. Today, she has another thought-provoking article, this time on the emergence of Iceland as ‘the world’s first country run like a hedge fund’. The article is worth reading in itself, but also for the question […]

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ExxonMobil regains top place

After 5 months, ExxonMobil is once again the world’s largest company by market capitalisation. PetroChina had overtaken it last November, but has since lost half its value in China’s stock market decline. Today, PC is worth $453bn, versus EM’s $455bn. China’s stock market has lost 25% so far this year. But PC has been particularly […]

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FT’s subprime jokes page

Those who liked my earlier posting about Margin calling, might like to look at the new online Financial Times page devoted to subprime jokes. For example, ‘What’s the definition of an optimistic investment banker?’ ‘Someone who irons 5 business shirts on a Sunday night.’ It also mentions the prospect of a new breakfast cereal being […]

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