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financial crisis

The Latest Bail Out – CIT

citThis piece of news is interesting not because it would impact on any investment strategy…but rather because we are in July 209 and the subprime crisis still haunts the US Treasury. The US government was simply forced to bail out one more bank – this time the smaller CIT bank was impacted.

CIT’s problems surfaced two years ago due to the CEO Jeffrey Peek’s decision taken earlier in the decade to expand into subprime mortgages and student loans, both potentially highly profitable but fraught with added risk. CIT has about $40 billion of long-term debt, according to independent research firm CreditSights. About $1.1 billion of debt will come due in August, followed by about $2.5 billion by the end of the year.Read More »The Latest Bail Out – CIT

IMF Reccomends Stronger Measures to Fight the Global Financial Crisis (2)

We come back to the IMF handbook published on April 2009, called “Global Financial Stability Report”. This time, we make refference to its reccomendations.

But before this, a new estimation of the IMF on the global write downs of assets. In January 2009 IMF estiamted the bad assets writing off to around $2.7 billion in the US only. In this latest report, the estimations included also other mature market-originated assets, which could increase the total write offs to around $4 billion. In other words, $4 billion of the US economy has been wiped off by the financial crisis (or will be, total until the end of 2010). Scary, isn’t it?Read More »IMF Reccomends Stronger Measures to Fight the Global Financial Crisis (2)

IMF Reccomends Stronger Measures to Fight the Global Financial Crisis

imf-building-2The International Monetary Fund (IMF) has recently published a comprehensive report called “Global Financial Stability Report – Responding to the Financial Crisis and Measuring the Systemic Risk.”. The IMF paper covers the history of the recent global financial crisis, as well as the measures taken by the governments and the companies to fight against it.

The report analyzes why the financial institutions have all been hit so hard by the current financial crisis, from the pension funds to the life insurance companies. These institutions were impacted despite the fact that most of them took preventive measures to manage potential surges in the risks of their assets. The report also underlines that there is a strong retrenchment from foreign markets, which outpaces strongly the overall de-leveraging process. The sharp decline of the cross border funding actuall created the crisis in the emerging markets, whilst the re-financing needs of those markets are still very large (estimated by the IMF at $1.8 trillion in 2009). Read More »IMF Reccomends Stronger Measures to Fight the Global Financial Crisis

How Long Will the Financial Crisis Still Last? (3)

Here we go again with one more survey on how long might still last the current financial crisis / recession. Compared to the last two surveys we had a couple of months ago, this one seems to be pretty more optimistic. This optimism is fueled by the recent slow recovery of the stock markets (see the Dow Jones recovering sharply in the last two weeks), as well as by the pace of the bad news pouring in at a slower pace.
The financial investing experts surveyed by point out at four main causes of their optimism:Read More »How Long Will the Financial Crisis Still Last? (3)

IMF Urges Eastern European Countries to Go for the Euro

imf-building-1The International Monetary Fund issued today a statement by which it encouraged the Eastern European countries to adopt Euro as thei currency, in order to avoid the further effects of the financial crisis. An article published in Financial Times today mentioned that:

“For countries in the EU, euro­isation offers the largest benefits in terms of resolving the foreign currency debt overhang [accumulation], removing uncertainty and restoring confidence. Without euroisation, addressing the foreign debt currency overhang would require massive domestic retrenchment in some countries, against growing political resistance.”Read More »IMF Urges Eastern European Countries to Go for the Euro

Government Offers Relief for Those in Financial Pain

governmentWell, sounds good, right? Too bad it is just a website fuill of advice on how to survive the financial crisis 🙂

The Substance Abuse and Mental Health Services Administration said on Tuesday that it created a website called The “Getting Through Tough Economic Times” guide at which wants to help people identify any serious health concerns related to financial worries, develop coping skills and find help. Read More »Government Offers Relief for Those in Financial Pain

AIG Pays, Then It Is Taxed, Then They Give the Money Back

aig-towerSometimes I can’t stop wondering. First of all, AIG decided to pay bonuses to its executives for about $160 million. Of course, the cash came from the roughly $90 billion government help to the worldwide linked insurer to survive until toady, in a move which was very much debated. Since AIG showed that its fall would trigger a domino collapse of the global financial system, it looks now like the government had little choice about it. And so it did.

Now the show turns sour for the bonuses recipients. Forced by the public opinion outrage (justified or not) and by the 90% taxation bill enforced by the Senate, most of the AIG executives decided to return those money to the company. In its famous book, “The Truth About Markets”, John Kay mentions in one chapter this irrationality of the capital markets – we do not blame a company that it fails under the assumption that all company fail (market crash), but its executives are rarely forgiven by the public. Yet, those people are not invincible. And the executives of AIG might argue that they worked hard for those money, which are not out of the usual payments.Read More »AIG Pays, Then It Is Taxed, Then They Give the Money Back