Every now and then, a single quotation summarises a complex situation. In August 2007, CitiGroup CEO, Chuck Prince, described their blindness to the financial crisis about to unfold. “We see a lot of people on the Street who are scared. We are not scared. We are not panicked. We are not rattled. Our team has […]
Chemicals and the Economy
Financial investors hike oil prices
“Crude oil is (now) more than just a physical product“, according to NPRA Chairman William Klesse. As he noted, “Today there is ample crude in the world, and crude is not at $80/bbl because of physical markets“. This was a strong statement from the head of the US National Petrochemical & Refiners Association, at the […]
LyondellBasell may be largest-ever bankruptcy
The financial fallout from the Lyondell (LBI) bankruptcy continues, as the banks slowly begin to acknowledge their losses. According to Bloomberg, RBS has taken a $1.47bn hit, Citigroup $1.4bn, and Goldman Sachs $850m. UBS are also believed to have lost at least $500m. But like Bank of America (new owners of Merrill Lynch), they have […]
And then there were none
20 years of investment banking as an independent activity came to an end on Wall Street last night. Bear Stearns was the first to go in March, rescued by JPMorgan. Last week Lehman failed, and Merrill Lynch sold itself to Bank of America. Now the two remaining survivors, Morgan Stanley and Goldman Sachs, have thrown […]
Just saying ‘No’
I noted back in February that US banks were tightening lending standards into the housing sector. Now they are doing the same with business loans. The New York Times reports today that businesses around the country are finding it more difficult to borrow. As a result, companies that depend on bank financing are having to […]
Deutsche Bank ends porn channel expenses
Spare a thought for the plight of the world’s investment bankers. According to the Financial Times, some minor cutbacks are finally taking place in the extravagant lifestyle to which they have come accustomed: • UBS, having lost $11bn in Q1, has now told its analysts to fly economy on short-haul flights. • Merrill Lynch bankers […]
INEOS’ Grangemouth plants on strike
Ineos’ 200,000bpd Grangemouth refinery in Scotland is on strike today and tomorrow, over a pension dispute. This will presumably cost the workers 2 days pay. The costs for INEOS and the UK are enormous in comparison. BP, for example, has had to shut down a pipeline that carries 40% of the UK’s oil production, because […]
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. […]
Oil supply worries increase
In recent days, 3 respected commentators on oil markets have raised concerns about the near and medium-term prospects for oil supplies: • Goldman Sachs has raised their 2008 WTI price forecast to $95/bbl from $85/bbl. This is driven by their expectation that cost inflation, plus continuing technological and political uncertainty, will ‘increase the price required […]
Asia ‘Recouples’
The major investment banks have changed their minds about the potential for Asia to ‘decouple’ from any credit-crunch induced downturn in the West. Originally, they had believed that domestic demand in China and elsewhere would enable the Asian economy to sail ahead, no matter what happened elsewhere. I was a bit sceptical of this hypothesis, […]
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