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Davos Recap: With castigation stage over, collaboration begins

Posted Feb 2nd 2009 6:30PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Recession, Financial Crisis

The nutshell on the 2009 World Economic Forum held in Davos? It was a conference where nearly everyone agreed that the financial crisis started in and is primarily the result of U.S. policy errors, but agreed on little else after that.

Further, the Davos gathering produced almost no new insights regarding the nature of the crisis beyond what is already known: that excessive leverage throughout the system, arcane and in some cases Frankenstein-like derivatives, inadequate national-level financial regulation, and the collapse of demand, set in motion first the U.S. recession, then the credit crunch, then the global recession.

Continue reading Davos Recap: With castigation stage over, collaboration begins

IMF wants nations to pass large fiscal stimulus packages

Posted Dec 30th 2008 11:45AM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Economic data, Politics, Recession

The unique characteristics of the global recession will require large, but focused, fiscal stimulus packages by nations around the globe, so says a leading international policy and research group.

The International Monetary Fund said the drop in demand requires a substantial fiscal stimulus of at least 2% of world domestic product (WDP), coordinated action, with a focus on spending and targeted tax cuts.

Roughly 2% of WDP would amount to $1.5-1.8 trillion in fiscal stimulus, according to research compiled by economist Peter Dawson.

"Fiscal stimulus by nations may have to be larger than that, given how much the global economy has slowed during the past year," Dawson said. "The IMF forecasts a WDP growth rate of 2.2% in 2009 but it will probably dip below that, which would suggest a need for an even larger fiscal stimulus, probably upwards of $2.0-2.3 trillion for 2009."

The unique factor driving the need for the above? For the first time in the post-World War II era, all major regions of the world -- U.S., E.U., China/Japan -- are in recession at the same time, as are the emerging market economies of India, Brazil, and Russia, Dawson said.

Continue reading IMF wants nations to pass large fiscal stimulus packages

Global economy: 'From boom to bust in one year'

Posted Dec 19th 2008 12:40PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Recession, Financial Crisis

Those investors and business executives expecting a return to 'giddy' global growth after the U.S. and global economies start to recover need to pay careful attention to one of the world's leading economists.

"Those expecting the world to return to 5% growth will be in for quite a surprise," Stephen Roach, chairman of Morgan Stanley Asia Ltd. (NYSE: MS) told Bloomberg News Friday. "We're maybe going back to 3% [global] growth but we're not going back to 5% growth for some time. So it's a wake up call. We've gone from boom to bust in one year."

Further, the International Monetary Fund agrees, by and large. The IMF now sees global GDP growth of 2.2% in 2009, which is down from solid 5.0% growth in 2007 and 5.1% in 2006. In 2008, the IMF expects the global economy to grow 3.7%, but only 2.5% on a Q4 2007 to Q4 2008, year-over-year basis.

A major unknown: China's 2009 economy

Economist David H. Wang told BloggingStocks Friday, economist Roach "is wise to both lower expectations and to sound the alarm" because economic fundamentals in all major economic regions of the world have deteriorated in 2008, and will continue to do so in 2009.

Continue reading Global economy: 'From boom to bust in one year'

World Bank sees global recession in 2009 on consumer pull-back, credit crunch

Posted Dec 10th 2008 5:45PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Bad news, Recession, Financial Crisis

Add two more somber forecasts for the global economy -- each with its own ignominious distinction.

The World Bank said the global economy will enter a recession for the first time since 1982. Equally distressing, international trade will also decline from 2007 levels.

Incredibly, the bank said it now expects global GDP growth to decline to a scant 0.9% in 2009 from 2.5% in 2008. That is a recession for the global economy, as any global growth rate under 2.0% is tantamount to a recession, economist David H. Wang said.

"This is very concerning news, if the World Bank's forecast proves to be accurate," Wang said. "Up to now many forecasts had global growth in the 1.5-2.0% range for 2009. My own estimate was for 1.8-2.0% GDP growth. A GDP rate below 0.9% is a major recession, which will mean higher unemployment, lower corporate revenue, and decreased trade, in most nations."

Further, global trade is expected to decline 2.1% in 2009, the bank said, its first decline since 1982, on reduced global demand and export credits.

Continue reading World Bank sees global recession in 2009 on consumer pull-back, credit crunch

Russia to invest in Fannie Mae, Freddie Mac bonds

Posted Feb 21st 2008 4:44PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Good news, Russia, Federal Natl Mtge (FNM)

In a development likely to be warmly-received by international finance and stock markets, Russia announced Thursday it will buy Fannie Mae and Freddie Mac bonds through its sovereign wealth funds, Russia's Finance Ministry said and Bloomberg News reported.

Russia will invest money from its Reserve Fund and National Wellbeing Fund into 15 government bond funds in Europe and the United States, including those in Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). Russia will also purchase government bonds in the U.K., Germany, France, Austria, Canada, and the Netherlands, Bloomberg News reported.

Both Fannie, down 56 cents $29.27, and Freddie, down 80 cents to $27.94, moved lower Thursday afternoon; however it should be noted that the declines occurred during a broad market sell-off, with the Dow down 159 points to 12,267.

Continue reading Russia to invest in Fannie Mae, Freddie Mac bonds

Symbol Lookup
IndexesChangePrice
DJIA+30.6910,464.40
NASDAQ+6.872,176.05
S&P 500+4.981,110.63

Last updated: November 26, 2009: 09:55 AM

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