Posts Tagged ‘NORDIC CRISIS’

BIS: WE HAVE FAILED TO LEARN FROM THE NORDIC CRISIS

BIS: WE HAVE FAILED TO LEARN FROM THE NORDIC CRISIS

Courtesy of The Pragmatic Capitalist 

The BIS recently released an excellent paper comparing the current crisis to the Nordic crisis.  This is a particularly interesting case study because the Nordic credit crisis was relatively clean for a credit crisis.  Perhaps most interesting is the fact that their crisis was unfolding at the same time as the Japanese crisis.  The results, however, were dramatically different.  I believe the thoughts from the BIS are particularly interesting as I was a proponent of the harsher Swedish Model - a bit more of an Austrian economics approach to the crisis as opposed to the Japanese model of trying to ensure capitalism without losers.  In recent months the USA is looking more and more Japanese and the BIS believes it is due to our flawed response:

“Our analysis indicates that current policies have followed those (Nordic) principles in some respects, but have fallen short in other, arguably more important, ones. If anything, the authorities have intervened even earlier than in the Nordic precedent. In the current episode, the down-leg of the financial cycle had not proceeded as far and banks were further away from the point of technical insolvency. However, the underlying weakness in balance sheets has not been recognised as fully. Efforts to write down assets and induce underlying adjustment in the sector have not been as extensive. Impaired assets have been kept on balance sheets at highly uncertain, and possibly inflated, values. The conditions attached to financial support have not been as strict with respect to asset and cost reductions; if anything, they have been designed with an eye to  sustaining lending. The need to reabsorb the sector’s excess capacity has taken a back seat. All this has tended to slow down resolution.

In other words, the zombie banks live on just as they have in Japan.  But perhaps most important is the fact that the losers have not been allowed to lose.  Government intervention has only kicked the can down the road.  The BIS detailed the successful principles involved in a swift crisis response and sustainable recovery:

Principle 1: Early recognition and intervention 
P1: The nature and size of the problems should be recognised early and intervention should follow quickly.

The purpose of early recognition and intervention is to avoid a hidden deterioration in conditions that could magnify the costs of the


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Phil's Favorites

Coronavirus: five reasons why the UK death toll is so high

 

Coronavirus: five reasons why the UK death toll is so high

Courtesy of Jasmina Panovska-Griffiths, UCL

At the start of the coronavirus pandemic, UK government advisers suggested that 20,000 UK deaths would be a good outcome. Today, the tally sits at more than 45,000.

There is no doubt the UK has been hit hard by coronavirus, and has the second-largest number of deaths worldwide, trailing only the USA which has five times the population and ...



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Biotech/COVID-19

Coronavirus: five reasons why the UK death toll is so high

 

Coronavirus: five reasons why the UK death toll is so high

Courtesy of Jasmina Panovska-Griffiths, UCL

At the start of the coronavirus pandemic, UK government advisers suggested that 20,000 UK deaths would be a good outcome. Today, the tally sits at more than 45,000.

There is no doubt the UK has been hit hard by coronavirus, and has the second-largest number of deaths worldwide, trailing only the USA which has five times the population and ...



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ValueWalk

The Sharp Rise In Activist Investors In 2020 - New Data released

By Jacob Wolinsky. Originally published at ValueWalk.

Q2 2020 hedge fund letters, conferences and more

Key data shows;

  • Campaigns carried out in H1 2020 shows an overall increase in the number of campaigns, figures look set to substantially top 2019’s total
  • In 2019, the number of campaigns increased significantly to 893 (compared to 655 in 2018). However, successful campaigns dropped by 15% and the number of unsuccessful campaigns increased by 34% (132 unsuccessful campaigns in 2018 to 185 in 2019).
  • Governance is now the new target for activism, and over the past decade, institutional investors have become more active in seek...


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Zero Hedge

The Sinking Titanic's Great Pumps Finally Fail

Courtesy of Charles Hugh Smith, OfTwoMinds blog

The greater fools still partying in the first-class lounge are in denial that even the greatest, most technologically advanced ship can sink.

On April 14, 1912, the liner Titanic, considered unsinkable due to its watertight compartments and other features, struck a glancing blow against a massive iceberg on that moonless, weirdly calm night. In the early hours of April 15, the great ship broke in half and sank, ending the lives of the majorit...



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Chart School

Dow 2020 Crash Watch - Update

Courtesy of Read the Ticker

Like 1929 the markets have bounced. This time it is on the back of the FED $6.5T money printing.

Previous Post: Dow 2020 Crash Watch 

But can the FED blow $6T every time the market rolls down to test support.

Yes, maybe before the US 2020 elections the FED will do 'what it takes'. But post elections not so much, the year 2021 is a long way from the next election (presidential or congress) and defense of the markets may not be so supportive at $6T or $10T per market smash. The FED may hesitate, and that will be window for stocks to break lower.

The 36 month simple moving a...

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Kimble Charting Solutions

Red Hot China Attempting Key Breakout, Says Joe Friday

Courtesy of Chris Kimble

China ETF (FXI) has been “Red Hot” of late? Is it about to run out of steam or will it remain on fire going forward?

This chart of FXI comes from Investors Business Daily and Marketsmith.com. It reflects that FXI is above key long-term moving averages and its RS ratings is moving sharply higher of late.

Line (1) has been support and resistance several times over the past 3-years. The rally of late has FXI ...



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The Technical Traders

Retail Traders & Investors Squeezed to Buy High-Risk Assets Again

Courtesy of Technical Traders

Yes, we certainly live in interesting times.  This, the last segment of our multi-part article on the current Q2 and Q3 2020 US and global economic expectations, as well as current data points, referencing very real ongoing concerns, we urge you to continue using common sense to help protect your assets and families from what we believe will be a very volatile end to 2020.  If you missed the first two segments of this research article, please take a moment to review them before continuing.

On May 24th, 2020, we published this ...



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Lee's Free Thinking

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

 

These Charts Show COVID 19 Is Spreading in the US and Will Kill the Economy

Courtesy of  

The COVID 19 pandemic is, predictably, worsening again in much of the US. Only the Northeast, and to a lesser extent some Midwestern states, have been consistently improving. And that trend could also reverse as those states fully reopen.

The problem in the US seems to be widespread public resistance to recommended practices of social distancing and mask wearing. In countries where these practices have been practi...



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Digital Currencies

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

 

Blockchains can trace foods from farm to plate, but the industry is still behind the curve

App-etising? LDprod

Courtesy of Michael Rogerson, University of Bath and Glenn Parry, University of Surrey

Food supply chains were vulnerable long before the coronavirus pandemic. Recent scandals have ranged from modern slavery ...



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Members' Corner

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

 

Coronavirus, 'Plandemic' and the seven traits of conspiratorial thinking

No matter the details of the plot, conspiracy theories follow common patterns of thought. Ranta Images/iStock/Getty Images Plus

Courtesy of John Cook, George Mason University; Sander van der Linden, University of Cambridge; Stephan Lewandowsky...



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Insider Scoop

Economic Data Scheduled For Friday

Courtesy of Benzinga

  • Data on nonfarm payrolls and unemployment rate for March will be released at 8:30 a.m. ET.
  • US Services Purchasing Managers' Index for March is scheduled for release at 9:45 a.m. ET.
  • The ISM's non-manufacturing index for March will be released at 10:00 a.m. ET.
  • The Baker Hughes North American rig count report for the latest week is scheduled for release at 1:00 p.m. ET.
...

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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

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