The West has been living with cheap money from the central banks for over 5 years. Credit has been very easy to obtain in the financial sector, and interest rates have been at all-time lows. The result can be seen in the chart above from Business Insider of total lending to fund stock purchases on the New […]
Tag Archives | Minsky moment
The UK housing market has led a charmed life in recent years. Unlike the US, Spain, Ireland and many other Western countries, prices have not collapsed. Instead, near zero interest rates, and the high proportion of mortgages on variable rates, meant that UK homeowners have seen their monthly payments reduce dramatically. There is just one […]
The global economy is now in the middle of its 3rd downturn in the past 4 years. The chart above shows how the blog’s benchmark products have acted as leading indicators on each occasion (yellow highlight): • In 2008, naphtha (red line) PTA (purple), benzene (green) and polyethylene (PE, blue) all peaked around the middle […]
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 […]
Pimco, the world’s largest bond fund, have repeated their belief that we are facing a ‘Minsky moment’, named after Hyman Minsky (pictured). His insight was that a long period of stability, such as that experienced over the past decade, eventually leads to major instability. This is because investors forget that higher reward equals higher risk. […]
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Paul Hodges is Chairman of International eChem, trusted commercial advisers to the global chemical industry.
The aim of this blog is to share ideas about the influences that may shape the chemical industry over the next 12 – 18 months. It will try to look behind today’s headlines, to understand what may happen next in important issues such oil prices, economic growth and the environment. We may also have some fun, investigating a few of the more offbeat events that take place from time to time. Please do join me and share your thoughts.
Between us, we will hopefully develop useful insights into the key factors that will drive the industry's future performance.