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Molly Fraser

Wikileaks: Saudis Warned About Oil Speculators in 2007 and 2008 - 2 views

www.nakedcapitalism.com/...culators-in-2007-and-2008.html

Oil and Resource Shortages

shared by Molly Fraser on 30 May 11 - No Cached
  • Molly Fraser on 03 Jun 11
     
    Kevin Hall of McClatchy wrote about Wikileaks releases showing that the Saudis were concerned about oil market speculation leading to unduly high prices in 2007 and 2008. In 2008, we wrote that the Saudis said they did not see tightness in the market, and they also warned that prices were excessive.
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  • Molly Fraser on 03 Jun 11
     
    It was quite frustrating in 2008 to see economics commentators reject statements by numerous oil market participants that supplies were more than adequate, that the price rise was driven by speculators.
  • Molly Fraser on 03 Jun 11
     
    The wikileaks releases confirm the fact that the Saudis were not attempting to shift the blame to speculators while privately enjoying profit, but were genuinely concerned over the effect that speculators had on spiking market prices. 2007/2008 saw a jump in oil prices that was unprecedented at the time; in 2007 alone, the price of oil was $58.74/Bbl in February, reaching $65.08/Bbl by June of the same year.
  • Molly Fraser on 03 Jun 11
     
    Ultimately this merely reaffirms anxieties that oil prices are likely at the whim of speculators rather than actual market availability. Unfortunately, markets are partially based on faith in one's investments; It would be wise in the future to trust the Saudi reports and take into consideration that everyone in the worldwide oil market- including western businesses- are in it for the money.
Dmitri Tkachenko

Back in the green: CEO pay jumps 13 per cent - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2039083

CEO performance unit shares high salaries

shared by Dmitri Tkachenko on 30 May 11 - No Cached
  • Dmitri Tkachenko on 30 May 11
     
    "The economic downturn in 2008 and 2009 was a distant memory by 2010 for Canada's top chief executive officers, at least as far as their pay packages were concerned. A Globe and Mail review of executive pay last year shows CEOs at Canada's 100 largest companies saw their compensation jump 13 per cent last year, led higher by a 20-per-cent increase in annual cash bonuses. Base salaries climbed 4 per cent. Instead, many gains for CEOs came from better economic performance by companies, which boosted variable elements of pay like cash bonuses. They can also be worthless. If the company performs in the bottom quarter of the peer group, and earns a negative return over three years, none of the share units vest for the executives. "
Kevin Yeo

How national borders impede global trade - The Globe and Mail - 0 views

www.theglobeandmail.com/...singlepage

Trade Border US Canada

shared by Kevin Yeo on 03 Jun 11 - No Cached
  • Two-way trade between the United States and Canada amounted to nearly $750-billion in 2008 before falling to $600-billion in 2009, thanks largely to the decline in energy prices and weakness in the auto sector; in both areas, Canada is the United States’ largest foreign supplier.
  • Thus, Canada’s $100-billion drop in exports to the United States between 2008 and 2009 was three times as large as the decline in Canada’s GDP during that period.
  • The point is not that internal trade flows or barriers to them are unimportant: in large countries, in particular, internal trade is often significantly larger overall than international trade and therefore even relatively small impediments to it can matter a great deal.
naheekim

Canada's mortgage debt surpasses $1T for first time - CTV News - 3 views

www.ctv.ca/...mortgage-debt-101108

mortgage debt

shared by naheekim on 26 May 11 - No Cached
  • Canadians are carrying more mortgage debt than ever before, with the total crossing the $1 trillion threshold for the first time
  • Canada's total outstanding mortgage debt was $1.0008 trillion as of August 2010.
  • "Over the past 15 years, the volume of outstanding residential mortgages has expanded by 194 per cent, or a growth rate of 7.5 per cent per year,"
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  • From 2004 to 2008 Canada's mortgage debt was growing at a rate of 10 per cent per year, but eased off as a result of the recession and hit 7.6 per cent in the most recent 12 month period
  • The report paints a positive picture of Canada's mortgage market, saying Canadian homeowners are comfortable with their mortgage debt, have "significant equity" and could even handle an increase in their interest rate.
  • In terms of interest rates, the report found that the average rate is 4.22 per cent, down from 4.55 per cent a year earlier. Among those who have financed or renewed a mortgage in the past year, the rate is 3.75 per cent.
  • Accordin g to the survey, 84 per cent of Canadians could afford an increase of $300 per month or more.
  • About 6 per cent of homeowners would have trouble with an increase of less than 1 per cent of their interest rate payment, and a further 5 per cent would have trouble with an increase of between 1 and 1.49 per cent
alex yesikov

Tag, You're It! Too Big to Fail Risk Transferred, Not Eliminated - Daniel Indiviglio - ... - 2 views

www.theatlantic.com/...239414

Systemic Risk USA Banks Financial Crisis 2008 Too big to fail

shared by alex yesikov on 30 May 11 - No Cached
  • Whenever we think of giant firms that a government feels it must bailout, big banks generally come to mind. Sure, an insurance company sneaked in there too, but AIG might have been more of an exception, since it so grossly underestimated the risks it was taking on its financial products and lived in a grey regulatory area. Although last summer's giant financial regulation bill sought to eliminate the systemic risk that led to a crisis a few years ago, it may have merely transferred some of it, creating a new breed of too big to fail firms
  • Those who understand the crisis know that derivatives were involved, particularly through AIG. It needed to be bailed out, because it did not have enough capital on hand to back up the credit default swaps agreements it had written. A large number of those were tied to the housing market, which caused the crisis.
  • In order to avoid this problem derivatives pose in the future, new financial regulation demands that all derivatives are cleared, when possible. For those who aren't familiar with clearing, the general idea is that each derivative is matched with an equal, opposite derivative through a central bookkeeper -- a clearing house -- to net out the risk they pose (more explanation with a lengthy analogy here).
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  • For example, imagine if AIG had cleared all of its credit default swaps. In theory, that means a clearing house would have ensured that the insurer had ample cash (or other collateral) on hand to satisfy their payouts.
alex yesikov

The 10 Banks Which Pose the Greatest Systemic Risk - Seeking Alpha - 1 views

seekingalpha.com/...ose-the-greatest-systemic-risk

Systemic Risk USA Banks Top 10 Future

shared by alex yesikov on 30 May 11 - No Cached
  • cently described the process that NYU uses to generate their results: The first step that Engle and colleagues propose is to calculate what they call the Marginal Expected Shortfall (MES) associated with a given financial institution. This is an estimate, based on recent dynamic variances and correlations of observed stock prices, of how much the stock valuation of a given institution would be expected to fall today if the overall market were to decline by more than 2%. This is essentially a time-varying tail-event beta, details of whose estimation can be found here.
alex yesikov

Governments Are The Primary Creators Of Systemic Risk - Charles Kadlec - Community of L... - 2 views

blogs.forbes.com/...mary-creators-of-systemic-risk

Greece Systemic Risk Blog Resession Euro

shared by alex yesikov on 30 May 11 - No Cached
  • The greatest lesson of the still young 21st century is proving to be that governments are the primary source of systemic risk to the economy, our standard of living, and our liberty.
  • The latest case in point is the European government debt crisis, with Greece once again running out of money and threatening to trigger yet another financial crisis.  The government’s debt now totals more than 150% of its GDP, and continues to grow.  Last year’s bailout by other European governments was supposed to give it the time needed to reduce its budget deficits so that next year Greece could roll over its maturing debts, as well as finance additional deficits at interest rates under 6%. However, the government’s austerity plan of tax increases and budget cuts has not reduced current or projected government deficits because the economy in 2010 contracted by 4.5% and the unemployment rate jumped to 15%.
  • Normally, this would be a matter between a debtor and its creditors. However, European Central Bank (ECB) Executive Board Member Juergen Stark warns that the effects of restructuring “could overshadow the effects of the Lehman bankruptcy,” which is associated with the beginning of the 2008 financial crisis.
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  • This risk is amplified by special rules created by politicians that encourage banks to lend freely to governments.
  • In the case of Greece, government actions and regulations also lie at the heart of what threatens to be a European financial crisis.
  • Here’s how it works. Governments require banks to hold capital against the loans that they make, anticipating that in the normal course of business, some of the loans will not be repaid.  The riskier the loan, the more capital that needs to be held in reserve. However, under international rules negotiated by government representatives through the Bank for International Settlements (BIS), government loans fit into a special category that has a 0% risk requirement.  That means European banks do not have to hold any reserves against loans they make to European governments.  That’s right, politicians implicitly promised banks that governments would never default.  And, given the opportunity to make “risk free” loans that require no capital commitment, bankers purchased mountains of government debt.
Alexei Goudzenko

Reimagining Food Systems in the Midst of a Hunger Crisis - IPS ipsnews.net - 0 views

ipsnews.net/news.asp

food systems reimagining

shared by Alexei Goudzenko on 04 Jun 11 - No Cached
  • "We can and must re- imagine other food systems that take numerous social dimensions into account."
  • These are poverty, caused by trade policies that dump heavily- subsidised produce from developed countries on third world markets, thus rendering local farmers jobless; environmental degradation brought on by industrialised farming, which now accounts for nearly one-third of global green house gas emissions; and an epidemic of malnutrition caused by the colonising effects of mono-crops and a flood of processed food from the global north to the global south.
  • Agro-ecology, which includes systems that produce their own fertiliser using materials and waste from the surrounding environment, is being increasingly viewed as the only viable solution to the hunger crisis. Since prices of fertiliser doubled during the 2008 food crisis, continents like Africa that import 95 percent of their chemical fertilisers could see radically different outcomes in production by adopting agro-ecological techniques.
dylan huber

Canada discovers trickle-up economics - 0 views

www.thestar.com/...discovers-trickle-up-economics

Income Inequality trickle down canada

shared by dylan huber on 03 Jun 11 - No Cached
  • there’s been a massive transfer of income and wealth from Canada’s middle and lower class to the rich.
  • some degree of inequality is inevitable and even desirable (allowing bigger rewards for those making bigger contributions), the level of inequality that exists today in the Anglo-American countries — the United States, Britain and Canada — is extreme
  • virtually all the income growth in the last 30 years has gone to the top.
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  • less equal societies almost always have more violence, more disease, more mental health problems, higher infant mortality rates, reduced life expectancies, as well as less social cohesion.
  • average CEO was making about 25 times the average worker in the late 1970s, today’s average CEO makes roughly 250 times the average worker.
  • evidence linking extreme inequality with serious economic problems. The level of inequality reached in 2008 was virtually identical to that of 1929, suggesting that large concentrations of wealth at the top create a dynamic leading to reckless financial speculation and Wall Street crashes
  • people in less equal societies have reduced social mobility.
  • the top-earning 1 per cent of Canadians almost doubled their share of national income, from 7.7 per cent to 13.8 per cent, over the past three decades.
Benjamin Gray

Mortgages changes you need to know - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2003964

leverage

shared by Benjamin Gray on 03 Jun 11 - No Cached
  • The world might be able to learn something from Canada about avoiding another housing-related financial meltdown, as the government recently announced several changes to the rules governing government insured residential mortgages. These changes are designed to reduce leverage in the system and promote housing market stability in the country.
  • This is the third time since 2008 that the government has tinkered with the system in an effort to reduce leverage and risk in the Canadian housing market.
  • The Canadian government has instituted several changes related to government-insured mortgages in an effort to promote housing market stability. These changes will reduce leverage in the system and are part of an effort to increase home ownership in Canada.
alex yesikov

Could Greece be the next Lehman Brothers? Yes - and potentially even worse | Larry Elli... - 0 views

www.guardian.co.uk/...ce-debt-crisis-lehman-brothers

Systemic Risk Banks USA Financial Crisis 2008 Greece

shared by alex yesikov on 02 Jun 11 - No Cached
  • It was less than three years ago that the failure of Lehman Brothers sent tremors through the global financial system, threatening the existence of every major bank and triggering the most severe economic crisis since the Great Depression. As Europe's policy elite met for fresh crisis talks today, the dark fear that haunted everyone around the table was this: if the bankruptcy of a middling-sized Wall Street investment bank with no retail customers could have such dire consequences, what would happen if the Greeks decide they have had enough and renege on their debts?
  • Could Greece, in other words, be the new Lehmans? Given the structure of modern financial markets, with their chains of derivative trades and their pyramids of debt, there is only one answer. Greece could certainly be the next Lehmans. The likelihood that a Greek default would pose a threat to the future of the eurozone as well as to the health of the world economy means it has the potential to be worse than Lehmans. Much worse.
  • To be fair, it's a tough one. A single currency that involved a hard core of European countries that were broadly similar in terms of economic development and industrial structure might just have worked. Bolting together a group of 17 disparate economies with different levels of productivity growth, different languages and different business cultures was an accident waiting to happen, and so it has proved.
Maria Li

Rate hikes okay for most but a 'financial shock' for many - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2041683

Consumer Debt Mortgages

shared by Maria Li on 03 Jun 11 - No Cached
  • Most Canadians should be able to handle higher interest rates expected later this year, but many will still see a "financial shock," Toronto-Dominion Bank economists say
  • "The main question is how households will respond to the eventual rebalancing of monetary policy, TD economists Craig Alexander and Diana Petramala write in a new report that looks at indebtedness among Canadian households.
  • Canadians will experience a financial shock when interest rates eventually rise, but the vast majority of households should be able to cope so long as interest rates rise only gradually
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  • Bank of Canada held its benchmark overnight rate steady at just 1 per cent, citing global uncertainty and the impact of the strong Canadian dollar, but said rates must eventually rise
  • Annual personal credit growth slowed to a year-over-year pace of 6.4 per cent in April, compared to an average 10.9 per cent in a period spanning 2004 to 2008
  • The moderation in credit growth has been evident in all measures of debt
  • The debt-service ratio, the interest households must pay on their debt each month as a share of personal disposable income, climbed to a two-year high of 7.6 per cent in [the first quarter of] 2011, despite still record low interest rates.
Mike Seo

Sharp export drop squeezes trade surplus - The Globe and Mail - 1 views

www.theglobeandmail.com/...article1981544

Trade Export Import

shared by Mike Seo on 01 Jun 11 - No Cached
  • Exports tumbled 4.9 per cent in February, outpacing a 4-per-cent drop in imports and slicing the country’s trade surplus to just $33-million, trade figures showed Tuesday.
  • Canadian export levels remain 19 per cent below their peak of July, 2008.
  • The sharp drop in February’s trade volumes “portends a slowdown in the Canadian economy in the second quarter of 2011 – a slowdown connected with less robust growth in the U.S., as well as major disruptions to North American vehicle output as a result of critical parts shortages from Japan,” said Brian Bethune, chief economist for Canada at IHS Global Insight.
  • ...3 more annotations...
  • The surplus narrowed in February, on lower exports of crude petroleum and cars, from a revised $382-million, Statistics Canada said Tuesday. Economists polled by Bloomberg had expected a surplus of $500-million.
  • Both imports and exports fell. Exports tumbled 4.9 per cent after four straight months of growth while imports slid 4 per cent.
  • Import volumes, meanwhile, fell 4.3 per cent while prices rose 0.2 per cent. Again, most of the drop was due to lower volumes in autos and energy. Exports to the United States fell 3.5 per cent after four months in a row of growth. Imports fell 6.1 per cent, leaving the surplus at $4.6-billion. Exports to countries other than the United States fell 8.5 per cent amid lower shipments of precious metals to the European Union. Energy exports fell 8 per cent, led by a drop in crude “reflecting higher inventories in the United States,” the agency said. That follows a 71-per-cent increase in crude exports from September to January.
Noah Schafer

Battle to slay the budget deficit continues to stall - The Globe and Mail - 0 views

www.theglobeandmail.com/...article2040896

debt Canada deficit lower economy

shared by Noah Schafer on 05 Jun 11 - No Cached
  • The Department of Finance estimates that the budget balance for the fiscal year 2010-11 will come in below what had been forecasted, and well below the deficit of 2009-10.
  • he Department of Finance estimates that the budget balance for the fiscal year 2010-11 will come in below what had been forecasted, and well below the deficit of 2009-10. It was expected and hoped that the budget balance would improve as the econom
  • The deficit has been stalled in the $35-billion a year range for the past 8-10 months.
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  • The steep decline in the 12-month moving sum that was produced by the recession finally turned around in early 2010, but the rebound lasted only a few months.
  • The graph also makes it clear that the trend to deficit began in early 2008, several months before the recession began.
  • The federal government’s decision to cut the GST would have produced a deficit even if the economy had remained stable.
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