Tag Archives | credit crunch

Interest rates to rise by the end of May

Headline interest rates are set by central banks. But the ones that we actually pay, as consumers or companies, are set by the banks themselves. And most of these are based on LIBOR – the London Inter-Bank Offer Rate – which is the main benchmark for $347 trillion of borrowing around the world. Now it […]

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Shipbuilding hit by credit squeeze and long lead-times

The chemical industry moves a lot of product by ship. Recent rises in freight rates have therefore had a major impact on costs for producers and consumers. But there was always the thought that rates would soon decline, once shipbuilders began delivering all the new ships on order. But now Bloomberg is suggesting that 10% […]

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‘Sometimes those questions lead to war’

The weekend’s finance minister meeting in Washington DC seems to have been quite different from its predecessors. Not only did they apparently have an ‘informal brainstorming session’ at one point, but they also found themselves confronted with two major and on-going crises: • We have to ‘put food into hungry mouths’ commented Bob Zoellick, President […]

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Credit crisis losses could reach $1 trillion – IMF

Last week the IMF warned there was a 25% chance of a global recession in 2008. Today, it said that the ‘crisis (was) creating serious macroeconomic feedback effects’ and could have ‘profound financial system and macroeconomic implications’. We normally expect central bankers to weigh their words carefully. But now the IMF has decided to throw […]

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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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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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‘Largest ever peacetime liquidity crisis’ says Bank of England

Its not often that one gets clear statements from central bankers. Today’s comment from the Bank of England’s Deputy Governor that the credit crunch was ‘an accident waiting to happen’ is truly remarkable for its clarity. She also gives the best one sentence summary that I have seen on the background to today’s credit crunch. […]

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BASF – the oil and gas company

BASF Chairman Jürgen Hambrecht sounded confident last week, following their annual results. 2007 sales were €58bn (up 10% on 2006), and income from operations was €7.3bn (up 8%). However, Q4 saw sales up just 1.6% at €14.7bn, and income actually down 3.4% at €1.6bn. The main culprit in Q4 was chemicals. Sales were marginally down […]

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UK nationalises Northern Rock

The UK government has today nationalised the country’s 8th largest bank, responsible for 18.9% of UK mortgage lending. You may remember that Northern Rock was an immediate victim of the US subprime crisis. Its funding model, based on securitisation, failed to work once lenders became more concerned about return of capital than return on capital. […]

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UK banks follow US lead in tightening credit

The Bank of England’s quarterly survey of corporate credit conditions, published today, shows that companies are finding it harder to get credit, and that rates are rising. This is in spite of the massive liquidity injections made by the Bank over the past 6 months, and its 0.5% interest rate cut. The Bank says that […]

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