MY SNAPSHOT, PLAIN-LANGUAGE ASSESSMENT OF LAST WEEK’S OUTSTANDING ECONOMIC EVENTS SHAPING OUR WORLD:
SUMMARY (update 1):
INTRODUCTION:
From a systemic point of view, global risk increased considerably this week!
GLOBAL ECONOMY:
Obama 1st Congress speech as US President. recovery plan, US would be stronger, health-care reform.
Also sent budget outline to Congress, with tax increases on wealthy to pay for health care.
US Jan Inflation +0.3% after falling previous 3 months. Energy Up, since July, still 1/3 below peak.House prices continued to fall. In 20 big cities -18.5% year to Dec. Previously owned -5.3% Jan.
United States shrank (GDP) 6.2%!...OOOPS!
US Confidence plunges!
US Recession: ..Worst in 3 decades?
Eastern Europe ec, currency worries, Poland called meeting ahead of EU summit. 4 may intervene.
Latvia’s president to form new gov. after PM quit. S&P's to junk status. Ukraine downgraded, again.
Japan’s exports -45.7% y to Jan. US -53%. Europe -47%.China -45%. Car's -69%. Job cuts. trade deficit $9.9 b, despite imports' fall.
Germany Feb Bus. conf. fell again, after Jan. slight rise.
Euro area Dec. Industrial goods orders -5.2%, 5th decline.
Poland cut its main interest rate by a quarter of a percentage point, to 4%, on February 25th.
S&P's, cut (again) Ukraine’s long-term foreign-currency rating to CCC+, the lowest in Europe.
Thailand cut its rate by half a percentage point, to 1.5%, the third reduction in as many months.
Anglo American mining to lay off employees on commodity prices. -19,000, 10% of global workforce.
Europe unemployment rises more than expected!
Hungary wants $230 B aid package for Eastern Europe...
Eastern Europe to get $31 B aid!
Japan Recession deepens as output plunges!
Chine: Coupons de consommation se multiplient!
México: ¡Desempleo en 5%!
UK GDP shrinks 1.5%, most since 1980!
Le PIB Allemand chute de 2.1%!
India Credit Rating......Junk?
México: ¡Caen ventas al mayoreo y al menudeo!
GLOBAL FINANCIAL SYSTEM:
US “stress tests”, Capital Assistance Programme. Banks $100 b in assets vs downturn jobless above 10% next year, house prices -27% in 2 years. US may nationalise some banks.
Officials rejected full bank nationalisation. Readied a third rescue plan for Citigroup.
Stockmarkets endured a difficult week, DJIA closing at its lowest level in nearly 12 years.
UK Asset Prot. Sch., 90% future losses. RBS 1st, $430 b assets, 1st loss £19.5 b/08, £24 b net loss, biggest ever.
Northern Rock offered $20 b new mortgage loans. A year after nationalised. UK to help fund loans.
JPMorgan cut dividend to 5 c from 38 c a share. 1st q profitable, capital strong. Save it $5 b/y.
Denmark seized Fionia Bank. Third nationalised since autumn.
CEO Rohner quit UBS, write-downs, biggest Swiss loss. Secrecy laws!. Now Credit Suisse' Grübel.
US Stocks tumble; S&P 500 drops to 12-year low on Citigroup, GDP numbers!
Euro-Area risks breakup on bank woes!...Really?
Citigroup Rescued!...Again?
Dollar sole refuge!...Euro, Swiss Franc, Yen...No alternatives?
Asian currencies tumble! ...Won Rupee faaall!
UK one step closer to nationalising banks!...What?..
Peso Mexicano: ¿Defendible?
US Bernanke spurns banks nationalization!
La Suisse se déchire sur son secret bancaire!
Obama gambles tests for banks!
Yen...Haven no more?
L'Europe de l'est!..Bombe pour l'euro?
G-20 Challenged: More global financial regulation?...
Obama bank nationalization?..Really?
Europe seeks crackdown on tax havens!
GLOBAL AUTO-INDUSTRY:
GM net loss $9.6 b 4thq, -$30.9 b/08. Liquidity worsened. GM Saab, bankruptcy No Sweden bail-out.
GEOPOLITICS & NATURE:
Hillary Clinton incresed pressure on North Korea to stop the launching test of a Missile (and stop its nuclear ambitions. Dejà-vu?
CONCLUSION:
From this week's economic and financial data the outlook is absolutely grim. Is the global financial "Perfect Storm" building up?
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PREVIOUS WEEKS:
SUMMARY (Update 1 of 3)! —- AWFUL—-AWFUL—-AWFUL ——
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GLOBAL ECONOMY:
Obama signed $787 b stimulus package to save 3.5m jobs. Also a $75 b homeowners bail-out plan.US Housing starts: -16.8% annual in Jan. -56.2% than 2008. New homes 466,000, record low. FED “longer term” inflation projections for employment, price stability. Inflation targeting next?
Ukraine to reject IMF bail-out, default? Poland zloty vs home loans. Russia -2.2% 2009. Rouble fell .
Japan 4th q GDP -3.3% or 12.7% annualised. Taiwan 4th q -8.4%. Singapore Jan. Exports -34%
Japan GDP -3.3% 4th q. Euro area -1.5%. OECD -1.5%,biggest drop since records started in 1960.
Mexico output 6.7% lower Dec than 2007’s.
GLOBAL FINANCIAL SYSTEM:
SEC charged Sir Allen Stanford, a billionaire, with $8 b fraud. Stanford International Bank.
UBS to tell US of 250 clients over taxes. A 1st for Swiss regulators. UBS to pay $780m to end case.
Moody’s cut Lloyds AAA rating. Its HBOS, annual -$14.4 b. To be fully nationalised? (now 43% UK’s).
GLOBAL AUTO-INDUSTRY:
GM, Chrysler submitted survival plans, for the $17.4 b bail-out. GM wants $16.6 b., Chrysler $5 b.
Daimler 4th q $2.1 b net loss, over stake in Chrysler. Annual profit -65%, hurt by Mercedes.
Mexican Car production -51% in Jan.Cars 1/5 of manufactures.
GEOPOLITICS & NATURE:
Venezuela’s Chávez, won his referendum to abolish term limits.
Conclussion:
Sorry, this weeks balance was still extremely negative. The fact that the markets didn’t react positively to the US stimulus packages underlined everything. The outlook is pessimistic to the nations, industries and last but not least to us, the people.
LAST WEEK’S SUMMARY:
Global Economy:
US Congress approved Obama’s stimulus package.
China’s exports fell 17.5% in January, year on year, imports -43%. Taiwan, Japan, S.Korea exports did much worse than china.
US jobless rate up from 7.2% to 7.6% in January. Canada’s Jobless from 6.6% to 7.2%. Britain’s from 5.9% to 6.3% 4th q, 2008.
Europe output slumps. Germany -12%, France -11,Italy’s -14.3%, UK -9.3% year to Dec.
Spain’s GDP -1% 4th quarter from 3th, worst in 15 years. Russia’s Growth (GDP) +1.1% year to 4th, from 6.2% in 3th. Latvia is the worst performing economy in the European Union as its GDP fell -10.5% in the 4th quarter 2008.
Sweden cut rate from 2% to 1%, and this economy is expected to shrink by 1.6% in 2009.S. Korea cut rate to 2%, a record low, to aid the plunging economy.
Global Financial System:
US Geithner’s announced a $2.5 trillion broad rescue package for the financial system. It includes more FED’s lending, and helping investors to buy toxic assets.
UK, US Bankers faced tough hearings in Congress and Parliament.
UBS from Switzerland lost $18.2 b, the biggest-ever.
BNP Paribas’s takeover of Fortis is in doubt on angry Fortis shareholders.
Global Auto Industry:
France to help Renault, PSA Peugeot-Citroën to stay in that country. Protectionism?
Nissan forecast a big annual loss. GM cut 14% or 10,000 salaried employees.
Geo-Politics and Nature:
China experiences its worst drought in 50 years. Six provinces affected and more than 40% of country’s wheat land.
Israel’s centrist Kadima party, Tzipi Livni Led and seemed to have won the most seats in general election.
Tsvangirai, the leader of Zimbabwe’s main opposition party, sworn in as PM.
PREVIOUS WEEKS:
—-The “Euro” warning signs are multiplying. Last week they came from two respectable sources, one was the International Monetary Fund and the other from Mr. Soros (who in foreign exchange has an extraordinary reputation, if sometimes a very controversial one. This week another one, that of Mr. Sarkozy (French President) is added to this anxious chorus. Let’s keep ourselves alert to monitor the unfolding of events regarding this currency, which being world’s 2nd most important, the risk implication (do we need more?) to global financial stability is notorious.– ( And you may wish to read the respective articles posted on this same “blog”, thank you. J CNN) –
Spain jobless rate rose to 14.4% and Ireland to 9.2%, highest for over a decade.
Ruble under attack -30% since August. Russia says there won’t be budget deficit?
Britain hit by strikes over foreign workers.
Brazil vs crisis to increase spending on infrastructure this year by 28%. Help poor with martgages.
N. Korea scrapping agreements with S. Korea to prevent hostilities. test its longest-range missile?
Iran’s satellite into orbit on 30th year of Islamic revolution. US viewed it with “great concern”.
Elections in 14 of Iraq’s 18 provinces. Relatively peaceful. Turnout was low.
UK reduced rates 1/2 % point, to 1%.
Japan’s Jobless: Panasonic -15,000 employees, NEC -20,000, Hitachi -7,000 to go. On spending & yen.
Motorola global mobile market 6.5%, from 23% some years ago.
US Jan car sales worst in decades. GM-49% Jan 2008, Ford -40%, Chrysler -55%. Toyota -32%.
US car-parts suppliers asked for $25.5 b in aid.
US GDP - 3.8% annual in 4th q, 2008, largest since 1982 but for inventories rise, over 5%. Better this quarter? Pending Home sales, Manufacturing and services barely picked up.
Euro area inflation fell from 1.6% to 1.1% in January, Manufacturing and services edged up in Jan from a record low. Spain jobless rose to 3.3m, + than 1 m higher than in 2008. Ireland, 8.3% to 9.2%.
Australia cut rate 1% p. 3.25%, lowest 45 y. Norway 1/2%p to 2.5%. Indonesia 1/2% to 8.25%.
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US House approved Obama’s $819 b stimulus package. No Republicans voted for it. Now the Senate’s turn.
Iran’s Ahmadinejad, responded to Mr Obama extending hand by angrily calling for an apology.
World Economic Forum began in Davos Switzerland in a, Depressing global crisis environment. Russia and China attacked the West, particularly the US for all the trouble.
Iceland’s government became the first to fall as a result of the financial crash. Early election in May.
Russia won’t deploy any missiles in Kaliningrad! Hopes Obama to delay missiles in Poland, Czech Rep.
Bolivia backed a new (President Morales’) polemic constitution but the majority in 4 rich “autonomous” departments rejected it. Political conflict will continue!
The International Labor Organization 2009 forecast considered the unemployed higher by 18m than in 2007, “worst-case scenario” 50m more.
IMF-2009 world growth forecast says it will be the worst since 1945. GDP 0.5%, from 2.2% last Nov. US -1.6%, Euro -2%, Japan -2.6%.UK-2.8%.
Banking System troubles continued: Bank of America to ask for more government aid. Nomura’s quarterly loss of $3.7 b is the biggest since 2001 on absorbing Lehman’s Europe, Asia operations, Iceland banking crisis and Madoff’s scheme. Santander to recompense with $1.8 b. First to offer on Maddoff. ING’s CEO resigned on quarterly loss gov aid.
FED kept rates at 0-0.25%. Will buy long-term government bonds if necessary.
US Bad economic news continued: January Consumer Confidence fell to 37.7, new low since 1967. House Prices also fell -18.2% year-to-Nov, Existing Home Sales+6.5% Dec. (Good News?).
Britain’s Growth fell by 1.5% 4th quarter of 2008, preliminary estimate. It was 1.8% lower than a year earlier.
United States Growth fell and Japan’s Industrial Production slumped.
To know more about these subjects please refer to the corresponding articles posted on this “blog”
The purpose of this basic report is simply to reassert the relevance of what you have already witnessed during the last 5 days and to inform you of anything that you could have missed. Of course, I’ll be always grateful for letting me know of those crisis-related happenings I failed to notice myself.
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USA 44th President swore in!
Israel, Hamas ceasefire held up!
China growth rate fell to 6.8% in the year to the 4th quarter,after attaining 9% in the 3th q. It was the slowest GDP growth in 7 years. It grew 9% 2008 and 13% in 2007 when it became the 3th largest world economy. Some say China is already in recession. Big risk of workers protests getting out of control!
Spain, Portugal ratings were downgraded by S&P’s as previously was Greece’s.
Brazil, Canada and Hungary were the latest to join the club of interest rate cutting nations to fight their economic slowdowns.
Banking troubles continued, with Bank of America (1st quarterly loss in 17 years), Citigroup (4th quarter net loss of 8.3 b), UK Banking System to get more aid from Government. RBS falling 67% on losses. Denmark and Irish Banks problems continued.
The Dow Jones Industrial Average closed below the 8,000 point for the first time since last November.
US Consumer Inflation -0.7% Dec, -1.7% Nov. Annual +0.1%. Core was still +1.8%.
The European Commission 2009 Economic forecasts: Euro Zone; -1.9%. Germany -2.3%, France -1.8%, Spain & Italy -2%. Ireland. -5%. Euro Budget Deficit to be 4% of GDP. Unemployment Rate to get to 10% in 2010.
United Kingdom Unemployment Rate was 6.1% in the 3 mths to Nov, the previous 3 months 5.7%. Unemployment benefit claims were the highest since 1991. Consumer Inflation slowed down from 4.1% to 3.1% in December.
CONCLUSSION:
It was an awful week which continued to reflect the severity of this Global Crisis. China’s depressing GDP economic data (worse than expected) may mean It is already in a recession (please read this blog’s corresponding article). In our globalised world, we can expect a very negative economic feedback to many, many countries as a side-effect of this nation’s slowdown. Last but not least, the sad welcome to Barack Obama from the financial markets (the inauguration day) does not show any approaching general confidence. The US stocks slumped dramatically that session and the DJIA closed below the 8,000 points for the 1st time since late November.
