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Chemicals and the Economy

Central banks pop champagne corks as stock markets soar

Central bankers mean well. But, of course, good intentions do not guarantee good results. Their intention since the start of the 2008 crisis has been to boost financial markets. They have therefore provided $tns of liquidity, which has indeed produced record highs in major stock market indices such as the S&P 500 and Dow Jones […]

Barclays CEO finally resigns

Bob Diamond, Barclays CEO, has finally resigned this morning. It is a scandal that he, or any of the Bank’s Board, ever thought that he could hold onto his job. He was, after all, head of Barclays Capital when the fixing of LIBOR rates took place. It is also a measure of the confused sense […]

Oil markets set up another ‘triangle’ pattern

As promised yesterday, the blog looks today at the impact of high frequency trading (HFT) on oil markets. This now takes place in micro-seconds. It is algorithm-driven via ‘black boxes’, and so fast that as Andy Haldane of the Bank of England notes: “Around 40,000 back-to-back trades can take place in the blink of an […]

UK house prices slip in H2

UK housing markets followed the US lead in recent decades. Conservative and Labour governments both shared a belief in extending property ownership as widely as possible. But what neither foresaw was the ‘unintended consequence’. Their policy of boosting home ownership coincided with the entry of the BabyBoom generation (those born between 1946-70) into the 25 […]

UK house prices begin to slip

The UK housing market has presented a confusing picture over the past 2 years. Unlike Spain, Ireland, or the USA, the lax lending conditions of the Boom years did not seem to lead to major price falls. In fact, along with Australia (benefiting from China’s commodity boom), UK prices even appeared to recover. This was […]

Bank of England endorses New Normal

The Bank of England has become the first major central bank to endorse the argument that we are moving towards a ‘New Normal’. In an important speech this week, its Governor Mervyn King, set out the argument that we can look forward to: “a SOBER decade – a decade of Savings, Orderly Budgets, and Equitable […]

“Impatience can ruin a whole life”

Anyone running a chemical company knows that the benefits of certain key decisions can take years to develop. Many companies had to support their nascent pharma businesses for 20 years, before steady profits began to flow. Whilst major complexes can easily take 10 years from inception to completion. Yet in recent years, investors have become […]

5 tips for surviving a period of deflation

The blog has been revisiting the Bank of England’s 2008 analysis of the likely impact of the financial Crisis. This reviewed 33 banking crises between 1977-2002 and found that: • The average length of each crisis was 4.3 years • The median loss of GDP was 7.1% • Major crises (such as today’s) caused GDP […]

INEOS was refused help by the UK government

INEOS CEO Jim Ratcliffe has told the Sunday Times that the UK government “refused financial help” last year, when sales collapsed. He revealed that: • The company had approached the UK government for help with liquidity, including deferral of VAT (sales tax) payments, but “got absolutely nowhere“. • Ratcliffe had even found it “quite difficult […]

Quote of the year

“Never in the field of financial endeavour has so much money been owed by so few to so many. And, one might add, so far with little real reform.” Bank of England Governor, Mervyn King, proposing that banks should be split up. He argues that high-risk trading activities should be split off from low-risk utility […]

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