US and the rest of the world entering into recession territory?

It is more fun criticizing
Amazon for instance fell by 13% in one day and erased a lot in Jeff Bezos wealth

 
Nikkei and Dax markets fell. Weaknesses in the economy showing through the stock market -  low job creation, high unemployment. very high interest payments for massive US $35 trillion debt

It was mentioned that Buffet was unloading lots of stocks.  He mentioned that US market is overvalued by 40%.  He has cashed out to be ready for bargain hunting during the crash.

World Wide Stock markets plunging

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Why are they crashing?   Because of prospect of recession in US.  Less than expected job creation and high unemployment rate.  Global uncertainty due to Iran Israel escalation of conflict. Bangladesh turmoil.

Stock market as in Nikkei saw double digit decline during trading.  This is unseen and reminiscent of 1987 crash.   

Should we be worried?  Or Phisix has plunged well ahead of the world market.   Will the Philippine GDP growth be affected.?

Should we continue with the Maharlika (sovereign fund)  Or is it going to do bargain hunting for collapsed stocks?

Credit Suisse problem is a worldwide financial malaise?

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Ulongnuno on Credit Suisse malaise

Manila Times - bank fears spread to Europe

Credit Suisse share prices dived a quarter on account of bad news about Silicon Valley Bank closure

All ready the prices of shares of Paribas and Deutsche  Societe Generalebank dived.

France's Societe Generale SA dropped 12 percent at one point. France's BNP Paribas fell more than 10 percent. Germany's Deutsche Bank tumbled 8 percent and Britain's Barclays Bank was down nearly 8 percent. Trading in the two French banks was briefly suspended.

Credit Suisse is "a much bigger concern for the global economy" than the midsize US banks that collapsed, said Andrew Kenningham, chief Europe economist for Capital Economics.

It has multiple subsidiaries outside Switzerland and handles trading for hedge funds.

"Credit Suisse is not just a Swiss problem but a global one," he said.

Since the CSB has branches elsewhere in Europe and the world, its problems malaise is not confined to Switzerland but around the world.   Gladly the Swiss National Bank promised a liquidity support up to $54 billion

This post may bear marks of nega and being alarmist.  But is this the global collapse that pundits are predicting? Could this be the start of worldwide recession.  ?  Have we braced enough for this.?

Has our country institued countermeasures. ?  But surely not yet since we are so far away yet  

One of the aspects that we should be concerned about this is the foreign remittances by OFW.  With these bank malaise, banks may tighten lending and if closed cause domino effect on the industries they are supporting..   And this may mean reduced inward remittances   Lesser consumer spending locally

Bad for the local economy.  Should we not be concerned?  

Bank stocks being pummeled world wide - could be the start of global recession, sell off, crisis"?

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Credit Suisse Bank woes

Reuters - support from Swiss National Bank to CSB

Three banks closed in USA:   Silvergate, Silicon Valley, and Signature (3S) All ready their closure sent jitters across the globe and contagion might be spreading   Excuse for sounding pessimistic but this is just being realistic.

The CSB (Credit Suisse Bank) dived 30% after its largest  stockholder said it was no longer supporting the bank   The second largest bank saw exodus of deposits of as much as $120 b fled its balance sheet.

While it had no liquidity issues yet, the Swiss Central Bank said it would come to the rescue. The bank is in this situation because of some scandals and bad decisions 

It is not unusual for banks to experience liquidity issues once there is a run (a mass withdrawal) because the fractional reserve system and of lending is not fully backed by 100% liquidty -  it is fractional, hence there will be shortage of funds

They say that when big banks in US and Europe sneeze, the rest of the world goes into convulsion   It is hoped that Asian banks, Philippines are in isolation rooms and would not be affected  ($300 billion asset size failure is not just a sneeze after all!)

Producers can not keep prices of prime commodities high forever; it will contract the economy and their sales

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Petron profits at P7.7 billion

We are complaining about high prices of prime commodities -  fuel, energy, food and others.  For most of them as in the case of an energy  company doubling its profits this can be done only briefly -  it is unsustainable

High prices will reduce the purchasing power of consumers (assuming  household income is constant) and recession may set in.   It is like shooting our foot.

So every one patience and businessmen, more discernment

Declining oil prices not good for the economy after all

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Philippines April 13, 2016

MIT - can deflation be prevented?

Deflation a threat to investors?

The plunging oil prices may be good for consumers: those who use gasoline and diesel fuel (like in fuel thirsty country like US)  But not good for the oil producers.  It has created difficulties and hardship for oil drillers rig makers, employees of oil companies, lenders to oil industry.  No investments are being made in oil production.  It has affected not only those in the industry but outside the industry.  It has also created downward spiral elsewhere in the economy.

In the ME a number of OFWs who work in the oil related industries are being sent home.   So this has affected consumer behavior as well.  Many consumers are buying less.  Economist say this is deflationary which is worrisome.  Prices will continue to plunge contracting the economy and leaving in its tailspin an economy in recession.

Deflation raises real value of debt and makes it harder to service.   It is a threat to investors.  For many central banks, the lower limits of low low interest rate has been reached.  (Why Japan now has negative interest rate?)

In most countries recession is tame, or no longer poses a threat.

Countries with floating currency like Japan and US can counter this with printing more money.   Easier said than done.


Do you agree?

Japan is in recession?

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Philippines  | November 18, 2014



This is rather disturbing.  Several months back, IMF President mentioned in an interview re EU woes that they are worried about Japan?  What worry about Japan, the 3rd biggest economy in the world, an economic juggernaut.  A model for industrialization and economic development?

What has happened?

Reports have it that raising taxes and raising consumption has not worked for Japan.   3rd quarter for Japan showed its economic output shrink by 1.6% officially throwing Japan into recession.

Has tsunami anything to do with this debacle? Or the Fukushima accident.?

The Days of A Supreme Western Nation as the World's Leading is Over?

Reflections

Sad to say, the country that is our ally and who liberated us (and massacred millions of our natives in a war involving them and us in l898) is seeing its glory days over.  Its massive expenditures on the arms race, patrollling the seas with its multibillion submarines, planes,ships, military bases and massive lending to the banks to finance real estate and housing bubble is telling on its massive debt, currency and the government.s ability to stay afloat.
 

l.  Since August of 20ll, its debt has grown by another l.5 trillion dollars.  Up to 200l, its debt was only about 7 trillion dollars.  Since that time, it grew to l4 trillion up to July 2011 (when they have the debt limit law debate)

2.  Payments of payables are delayed.

3.  The Federal Reserve Bank is infusing more credit into the economy:  via loans to bank, more money (although they are saying they are not printing more money)  But digital money is created electronically.

4.  Its operation is financed by massive debt abroad and the debts from this country is now just trickling in, no longer as floods

5.  Even their own savvy investors are warning against investment in government securities;

6.  Unemployment is a big problem;

7.  Loss of productivity and more cash in circulation is fanning inflation (massive spikes in prices of fuel and food items)

Let us pray for them