Tag Archives | bankruptcy

China’s empty cities create global lending risk

More details continue to surface of the wasteful spending that underpinned much of China’s GDP growth in recent years.  The empty city of Ordos (first highlighted 3 years ago in the blog) is just one example.  House prices there have recently fallen 50%, and the shadow banking system (critical for privately-owned companies) is reportedly in […]

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5 signs of a failing business

The Toyota problems, with over 9 million autos being recalled around the world, has set the blog thinking about how to spot corporate disaster in the making. One excellent source of insight is Prof Jim Collins’ book, ‘How the Mighty Fall’, published last year. This suggests that doomed businesses pass through 5 key stages. Encouragingly, […]

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China’s polyethylene imports surge 63%

The above chart, courtesy of trade data experts GTIS, shows the extraordinary leap in China’s polyethylene imports this year. They have surged 63% January – October in 2009 (blue bar) to 6.7 million tonnes versus 4.2 MT in 2007 (green bar) and 2008 (orange bar). Many countries have seen massive rises. Iran exported 404kt vs […]

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Insolvent US banks can’t lend

Many US policymakers are still in denial about the underlying causes of the downturn. They argue it is due to a lack of liquidity, and are thus encouraging ‘hot money’ to flood into financial markets. But the new ‘bubbles’ created by this wishful thinking, such as today’s $80/bbl oil prices, are making the underlying problem […]

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US housing loans still toxic assets

There are two main views on the financial crisis that began last September. The mainstream view, as expressed by the US Federal Reserve, is that it was a problem of liquidity. Banks became frightened to lend, and so the Fed stepped in as “lender of last resort”. So given time, everything will soon be back […]

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Swedish bank takes over Top 50 European automotive supplier from private equity

In 2007, Sweden was the largest private equity market in Europe, as a percentage of the country’s GDP. And the local banks lent freely, as elsewhere, to fund investments. Now they, and other Nordic banks, are struggling to minimise their losses. According to Bloomberg, Sweden’s second-biggest bank, Handelsbanken, “seized parts of Plastal Group and Plastal […]

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V-shaped sellers meet L-shaped buyers

Picture: www.businessoffashion.com A senior figure in the investment community told the blog recently that companies’ views on the outlook for the economy seemed to vary according to their own financial position: “the stronger the balance sheet, the more realistic (and worse) the view on the economy”. This analysis was confirmed at an interesting M&A Round […]

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Difficult decisions loom on future US auto demand

By the end of May last year, 6.2m autos had been sold in the US market, each containing $2700 of chemicals (according to the ACC). The total sales value to the chemical industry was $16.8bn. So far this year, just 3.9m autos have been sold, with a value of $10.7bn. Recent downturns have always seen […]

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Chrysler bankruptcy to last years, not months

More details are now emerging of the US government’s plans for Chrysler. Initially President Obama said he hoped the bankruptcy process would only last 60 days. But according to Bloomberg, the administration now accepts that this period will just cover the “sale of Chrysler’s best assets” to Fiat. Suppliers, including those in the chemical industry, […]

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US Fed supports Wall Street earnings, ignores corporate sector risks

In July 2007, the US Federal Reserve warned that “credit concerns were spreading” and estimated that total bank losses due to US sub-prime loans could reach $100bn. Yet now, after the conclusion of its “stress tests”, the Fed says total bank losses could reach $600bn. In most companies, a 6-fold change in a key financial […]

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