Channel News Asia
Chinese PM says impact of financial crisis on China "worse than expected"
Posted: 13 November 2008 1242 hrs
BEIJING: China's Premier Wen Jiabao said the effect of the global financial meltdown on the country was "worse than expected," state media said Thursday, in a sign of growing concern at the impact of the crisis.
Wen was quoted as making the assessment by the director of the National Bureau of Statistics Ma Jiantang when he briefed his staff on Tuesday, according to the website of the bureau's newspaper China Information News.
"The impact of the global financial crisis on the Chinese economy is much worse than many had expected," Ma said according to the website, passing on remarks made by Wen.
China initially said the global financial crisis would not cause too much harm to its economy, but in recent days the signals from Beijing have changed markedly.
Wen's comment comes after the Chinese government unveiled a four trillion yuan (US$586 billion) economic stimulus plan on Sunday aimed at boosting domestic consumer demand in the face of flagging exports.
- AFP/yb
Showing posts with label Financial crisis. Show all posts
Showing posts with label Financial crisis. Show all posts
Thursday, November 13, 2008
Wednesday, November 12, 2008
George Soros: Global financial crisis has bottomed
George Soros in his recent interview with the Estonia media said that the global credit crisis has bottomed and the financial systems are on the self healing stage.
George Soros said that with the filing for bankruptcy of Lehman Brothers, the financial system that has stopped functioning before that has started to work again. But he also mentioned that the unemployment, the survival of the companies and other financial problems arising from the crisis will still continue to happen.
Regarding this crisis, George Soros mentioned that this is the biggest crisis he has ever seen in his life time. He said that he has never seen such a crisis before and he will not see another such crisis again.
To those points by George Soros, secretary general from the Academy of Social Sciences International Financial Research Center 张明 said in an interview with the Chinese media that he basically agrees with what George Soros have said. 张明 thinks that although the financial market will still have some pitfalls, it needs time to stabalize but the big fluctuations in September period will not occur again. After the big fluctuations in September, with the mesures taken by various countries, the banking credit system is starting to show signs of recovery, the banks self healing process can be seen. But 张明 also points out that the current crisis effect on the real economy will need a longer time to recover. The recovery process will take at least 3 to 5 years. The impact to the real economy has just only begun.
Market analysts said that under the current panic period where people are selling their stocks, George Soros and another investing master Warren Buffett have been buying up big companies stocks around the world. Their buy ups stretches from the US to Australia. They are looking for seeds in the market which can provide long term returns. Recently Buffett spent 5 billion USD investing in Goldman Sachs and invested another 3 billion USD in GE. And in last month, Buffett in an article in The New York Times said that he has started to buy US stocks and suggests investors to start investing in the US stock market. George Soros has also started buying 5% of Australia's Sphere Investments. Sphere Investments is preparing to develope a metal mining project worth billions of USD in Mauritania.
Rebound of German Investor Confidence Index
The ZEW Center for European Economic Research in Mannheim announced yesterday the November 2008 Germany's Investor Confidence Index. The data shows that becuase of the Europe Central Bank action in reducing the interest rates and the determination of the German government to stimulate the economy, Germany's Investor Confidence Index shown a rebound from October's -63 to November's -53.5. Analysts expectation were -63.
The German government this month started implementing its 500 billion Euros economic stimulus plan. The German DAX started to rebound last month from its 3 years low. At the same time, the Euro inter-bank lending rates has dropped the lowest point since February.
Frankfurt Commerzbank AG economist Ralph Solveen thinks that investor confidence has reached a turning point. But this will not change the gloomy situation for Germany's economy in the coming few months because the Investor Confidence Index historical average value is -27.1 and currently it has been negative for 16 months consecutively. Also, a gauge measuring investors' assessment of the current situation fell to minus 50.4 from minus 35.9 in October. The Euro November ZEW economic index is -54, expectation was -60.5.
George Soros said that with the filing for bankruptcy of Lehman Brothers, the financial system that has stopped functioning before that has started to work again. But he also mentioned that the unemployment, the survival of the companies and other financial problems arising from the crisis will still continue to happen.
Regarding this crisis, George Soros mentioned that this is the biggest crisis he has ever seen in his life time. He said that he has never seen such a crisis before and he will not see another such crisis again.
To those points by George Soros, secretary general from the Academy of Social Sciences International Financial Research Center 张明 said in an interview with the Chinese media that he basically agrees with what George Soros have said. 张明 thinks that although the financial market will still have some pitfalls, it needs time to stabalize but the big fluctuations in September period will not occur again. After the big fluctuations in September, with the mesures taken by various countries, the banking credit system is starting to show signs of recovery, the banks self healing process can be seen. But 张明 also points out that the current crisis effect on the real economy will need a longer time to recover. The recovery process will take at least 3 to 5 years. The impact to the real economy has just only begun.
Market analysts said that under the current panic period where people are selling their stocks, George Soros and another investing master Warren Buffett have been buying up big companies stocks around the world. Their buy ups stretches from the US to Australia. They are looking for seeds in the market which can provide long term returns. Recently Buffett spent 5 billion USD investing in Goldman Sachs and invested another 3 billion USD in GE. And in last month, Buffett in an article in The New York Times said that he has started to buy US stocks and suggests investors to start investing in the US stock market. George Soros has also started buying 5% of Australia's Sphere Investments. Sphere Investments is preparing to develope a metal mining project worth billions of USD in Mauritania.
Rebound of German Investor Confidence Index
The ZEW Center for European Economic Research in Mannheim announced yesterday the November 2008 Germany's Investor Confidence Index. The data shows that becuase of the Europe Central Bank action in reducing the interest rates and the determination of the German government to stimulate the economy, Germany's Investor Confidence Index shown a rebound from October's -63 to November's -53.5. Analysts expectation were -63.
The German government this month started implementing its 500 billion Euros economic stimulus plan. The German DAX started to rebound last month from its 3 years low. At the same time, the Euro inter-bank lending rates has dropped the lowest point since February.
Frankfurt Commerzbank AG economist Ralph Solveen thinks that investor confidence has reached a turning point. But this will not change the gloomy situation for Germany's economy in the coming few months because the Investor Confidence Index historical average value is -27.1 and currently it has been negative for 16 months consecutively. Also, a gauge measuring investors' assessment of the current situation fell to minus 50.4 from minus 35.9 in October. The Euro November ZEW economic index is -54, expectation was -60.5.
US will not repeat the great depression in 1929
After the financial crisis struck in 1929, the 10 years of great depression after that has severely affected the social livelihood of people. Now, the financial crisis has appeared again and is spreading by the day. Some economists think that the financial crisis this time will not cause and end with a great depression. One such economist, 阮思余, provided his thoughts.
阮思余 thinks that the most severe result of a great depression like the 1920s to 1930s will not happen because of 3 reasons.
Reason 1
The great depression provided good teaching materials for the current financial crisis. The lessons and experiences learned from the great depression will provide a model to help tackle the current financial crisis. The main points are strengthening of the budget balances, the president's swift and positive actions/policies, ie, coming out with strong and effective measures to encourage and restore confidence to people and keeping constant communication with the public in order to step up the recovery of the economy.
Reason 2
Global cooperation is the best choice to tackle the current financial crisis. The in-depth development of globalization has forced countries to strengthen economic cooperation, at the same time, countries have to face together to tackle the current financial crisis. After all, no one can escape unhurt from the current financial crisis. This can also be put into another point of view that globalization has tangled the various countries on the earth together in a web, when one is affected, the rest will also be affected. The financial crisis spreading from US now needs global cooperation in order to contain and resolve it. From the eager and positive responses from various country's top governance to the coming Washington Global Financial Summit to be held on the 15 November is the best proof.
Reason 3
The 'switching' of the US political parties provides the best time to tackle the current financial crisis. Now, as democrat Obama is about to take over the US presidency, his idea of strengthening the government with structured supervision will let the US government have better control comparing to the republican's idea of a free market.
阮思余 thinks that with the global cooperation and the change of the US political parties, what can be expected is that the US economy will gradually move towards an orderly and positive transition phase to recovery.
阮思余 thinks that the most severe result of a great depression like the 1920s to 1930s will not happen because of 3 reasons.
Reason 1
The great depression provided good teaching materials for the current financial crisis. The lessons and experiences learned from the great depression will provide a model to help tackle the current financial crisis. The main points are strengthening of the budget balances, the president's swift and positive actions/policies, ie, coming out with strong and effective measures to encourage and restore confidence to people and keeping constant communication with the public in order to step up the recovery of the economy.
Reason 2
Global cooperation is the best choice to tackle the current financial crisis. The in-depth development of globalization has forced countries to strengthen economic cooperation, at the same time, countries have to face together to tackle the current financial crisis. After all, no one can escape unhurt from the current financial crisis. This can also be put into another point of view that globalization has tangled the various countries on the earth together in a web, when one is affected, the rest will also be affected. The financial crisis spreading from US now needs global cooperation in order to contain and resolve it. From the eager and positive responses from various country's top governance to the coming Washington Global Financial Summit to be held on the 15 November is the best proof.
Reason 3
The 'switching' of the US political parties provides the best time to tackle the current financial crisis. Now, as democrat Obama is about to take over the US presidency, his idea of strengthening the government with structured supervision will let the US government have better control comparing to the republican's idea of a free market.
阮思余 thinks that with the global cooperation and the change of the US political parties, what can be expected is that the US economy will gradually move towards an orderly and positive transition phase to recovery.
Thursday, November 6, 2008
Crisis will last till 2010
The Straits Times
Nov 6, 2008 |
Crisis will last till 2010
By Fiona Chan
THE financial crisis will last until the middle of 2010, when housing prices in the United States are expected to bottom out, predicted currency market guru Eisuke Sakakibara on Thursday.
'The days of Wall Street and Greenspan are over,' declared Dr Sakakibara, Japan's former Vice-Minister of Finance for International Affairs and one of the world's most influential economics commentators.
He is also known as 'Mr Yen' for his ability to move the foreign exchange markets, Greenspan-like, with his pronouncements during his tenure as Financial Commissioner to Japan's Ministry of Finance.
At a luncheon talk on Thursday, Dr Sakakibara said that the world economy, which had been dominated by the financial sector and financial engineering, will swing back to focus on the 'real sectors of manufacturing and services'.
He anticipates a 'fundamental change in regulations', with more rules imposed on leveraging and risk-taking by commercial institutions.
Although the period of panic is over, temporarily perhaps, the rapid credit contraction and deleveraging that has taken place is likely to continue until 2010, he said.
With Wall Street licking its wounds, Dr Sakakibara also suggested that Asian financial centres - including Singapore - should seize this chance to grow aggressively and shine.
'With the fall of Wall Street as a major financial centre, you could develop some sort of Asian regional financial transactions, and Singapore obviously is one of the candidates to be the centre of such regional financing.'
Nov 6, 2008 |
Crisis will last till 2010
By Fiona Chan
THE financial crisis will last until the middle of 2010, when housing prices in the United States are expected to bottom out, predicted currency market guru Eisuke Sakakibara on Thursday.
'The days of Wall Street and Greenspan are over,' declared Dr Sakakibara, Japan's former Vice-Minister of Finance for International Affairs and one of the world's most influential economics commentators.
He is also known as 'Mr Yen' for his ability to move the foreign exchange markets, Greenspan-like, with his pronouncements during his tenure as Financial Commissioner to Japan's Ministry of Finance.
At a luncheon talk on Thursday, Dr Sakakibara said that the world economy, which had been dominated by the financial sector and financial engineering, will swing back to focus on the 'real sectors of manufacturing and services'.
He anticipates a 'fundamental change in regulations', with more rules imposed on leveraging and risk-taking by commercial institutions.
Although the period of panic is over, temporarily perhaps, the rapid credit contraction and deleveraging that has taken place is likely to continue until 2010, he said.
With Wall Street licking its wounds, Dr Sakakibara also suggested that Asian financial centres - including Singapore - should seize this chance to grow aggressively and shine.
'With the fall of Wall Street as a major financial centre, you could develop some sort of Asian regional financial transactions, and Singapore obviously is one of the candidates to be the centre of such regional financing.'
Monday, November 3, 2008
US may come out with 2nd round of financial rescue plans by this week
According to reports, if the US congressmen were to come back from Washington this week with the new US president's approval, US taxpayers or voters may by this week see the 2nd round financial rescue plans from the US government.
The last 168 billion worth of financial stimulus package was signed in February and the effect was not very prominent. The rescue plan this time if it were to come, the area of coverage may be wider and the 'strength' bigger.
The plan originally was estimated to need about 600 billion USD. It was later reduced down to 150 billion USD and later revised to about 300 billion USD, which is about 2% of US GDP. Although 300 billion USD is much lesser than the government's support for the finance department, but it is the largest sum in the recent economic stimulus packages.
The Wall Street Journal in US released a report on the 31 October 2008 mentioning that ending 2007, the top 9 banks that accepted the US government financial aids owed the senior management pension funds and deferred bonus payouts amounting to more than 40 billion USD. This means that part of the financial aid funds meant to help banks loosen the liquidity crisis may have ended up in the top management pockets.
The US House of Representatives Finance Committee Chairman Barney Frank says that funds meant to be used to save the market if used for other means, like for example paying Wall Street managers bonuses or pension funds will be a criminal act.
US Congress is now investigating the 9 banks top management year end bonus packages. The US government says that it is closely monitoring how the banks uses the financial aid funds and will make sure that they will not be mis-used.
The last 168 billion worth of financial stimulus package was signed in February and the effect was not very prominent. The rescue plan this time if it were to come, the area of coverage may be wider and the 'strength' bigger.
The plan originally was estimated to need about 600 billion USD. It was later reduced down to 150 billion USD and later revised to about 300 billion USD, which is about 2% of US GDP. Although 300 billion USD is much lesser than the government's support for the finance department, but it is the largest sum in the recent economic stimulus packages.
The Wall Street Journal in US released a report on the 31 October 2008 mentioning that ending 2007, the top 9 banks that accepted the US government financial aids owed the senior management pension funds and deferred bonus payouts amounting to more than 40 billion USD. This means that part of the financial aid funds meant to help banks loosen the liquidity crisis may have ended up in the top management pockets.
The US House of Representatives Finance Committee Chairman Barney Frank says that funds meant to be used to save the market if used for other means, like for example paying Wall Street managers bonuses or pension funds will be a criminal act.
US Congress is now investigating the 9 banks top management year end bonus packages. The US government says that it is closely monitoring how the banks uses the financial aid funds and will make sure that they will not be mis-used.
Thursday, October 30, 2008
Nobel laureate says worst of economic crisis is over
Channel News Asia
Nobel laureate says worst of economic crisis is over
Posted: 30 October 2008 1701 hrs
SEOUL - Nobel economics laureate Robert Mundell said Thursday the worst of the world economic crisis is over and the US economy is in the recovery phase.
The winner of the 1999 Nobel Prize in economics also said there was a need to consider the possibilities of an Asian currency or an Asian Monetary Fund.
"The world economy is not in as bad shape as it appears from the news," he said in his keynote presentation at the World Leaders Forum held here to commemorate the 60th anniversary of the founding of South Korea.
"The real economy has not collapsed. The worst is behind us," he was quoted as saying by Yonhap news agency.
"The US growth was superb in the first three quarters of 2007. Then there were two quarters of nearly zero growth -- a severe growth recession," said the professor of economics at Columbia University in New York.
Then during second quarter of 2008, the US growth rate shot up to 3.3 per cent, he said, adding growth in the third quarter to September this year will "probably turn out to be about two per cent."
Mundell pointed out that the pattern of the recent economic slowdowns in the US and European economies was similar to that in 2002.
"At that time, the US went first, then Europe followed it about eight months later," he said.
"The same pattern is with us now. The US is now in the recovery phase while Europe is retreating, giving rise to the huge swing of exchange rates," Yonhap quoted him as saying.
And regarding the need to think about an Asian currency or monetary fund, he said: "My view is that it is best for Asia to pursue both a regional approach or an international approach in response to the Europe-led increased regionalisation of the international monetary system." - AFP/vm
Nobel laureate says worst of economic crisis is over
Posted: 30 October 2008 1701 hrs
SEOUL - Nobel economics laureate Robert Mundell said Thursday the worst of the world economic crisis is over and the US economy is in the recovery phase.
The winner of the 1999 Nobel Prize in economics also said there was a need to consider the possibilities of an Asian currency or an Asian Monetary Fund.
"The world economy is not in as bad shape as it appears from the news," he said in his keynote presentation at the World Leaders Forum held here to commemorate the 60th anniversary of the founding of South Korea.
"The real economy has not collapsed. The worst is behind us," he was quoted as saying by Yonhap news agency.
"The US growth was superb in the first three quarters of 2007. Then there were two quarters of nearly zero growth -- a severe growth recession," said the professor of economics at Columbia University in New York.
Then during second quarter of 2008, the US growth rate shot up to 3.3 per cent, he said, adding growth in the third quarter to September this year will "probably turn out to be about two per cent."
Mundell pointed out that the pattern of the recent economic slowdowns in the US and European economies was similar to that in 2002.
"At that time, the US went first, then Europe followed it about eight months later," he said.
"The same pattern is with us now. The US is now in the recovery phase while Europe is retreating, giving rise to the huge swing of exchange rates," Yonhap quoted him as saying.
And regarding the need to think about an Asian currency or monetary fund, he said: "My view is that it is best for Asia to pursue both a regional approach or an international approach in response to the Europe-led increased regionalisation of the international monetary system." - AFP/vm
Financial crisis affecting US credit cards industry
As the financial crisis worsens, the US credit cards industry have also been affected. The number of default payments are on the rise and the credit card issuers are taking measures to tighten their business.
According to report from The New York Times, because the number of default payments are on the rise, credit issuers in the first half of the year have been forced to write off about 21 billion US dollars of bad debts. The report quotes analyst estimation that in the coming one and half years, the US credit cards industry on the whole can see about a loss of about 55 billion US dollars.
In the report, currently US credit cards industry default payment losses are at about 5.5% of the total unpaid debts. The prediction is that this ratio will increase and cross over the 7.9% mark made after the 2001 internet bubble burst.
The report also points out that the reason for the increase in number of credit card payment defaults is because of the worsening of the financial crisis and its effect on the real economy. The US unemployment rate is also on the rise which adds more financial pressure on credit card holders.
To prevent further losses, the US credit cards industry have taken measures to tighten their business which includes increasing credit card applicants qualifying standards and decrease of credit cards issuance.
According to report from The New York Times, because the number of default payments are on the rise, credit issuers in the first half of the year have been forced to write off about 21 billion US dollars of bad debts. The report quotes analyst estimation that in the coming one and half years, the US credit cards industry on the whole can see about a loss of about 55 billion US dollars.
In the report, currently US credit cards industry default payment losses are at about 5.5% of the total unpaid debts. The prediction is that this ratio will increase and cross over the 7.9% mark made after the 2001 internet bubble burst.
The report also points out that the reason for the increase in number of credit card payment defaults is because of the worsening of the financial crisis and its effect on the real economy. The US unemployment rate is also on the rise which adds more financial pressure on credit card holders.
To prevent further losses, the US credit cards industry have taken measures to tighten their business which includes increasing credit card applicants qualifying standards and decrease of credit cards issuance.
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