Patricio Guzmán S.
debt crisis in Europe, poor macroeconomic performance in the U.S., risk of the imminent explosion of the massive speculative bubble in real estate and debt that are behind it, we are facing the prospect of a new global recession, and the best of an 'age of austerity' and low growth. The fragile recovery of the last six months have given way quickly, even before regaining the levels of the economy prior to 2008, a double-dip recession crisis, a nightmare for the capitalist governments expected a growth stage to enable them to cope on debt and fiscal deficit product of the 'rescue and stimulus packages "to those who avoided the collapse in 2008.
To avoid the possibility of a cessation of payments of countries like Greece, Spain, Portugal, Ireland, and the fall banks in France and Germany who are most exposed to these new 'toxic debt', and overall fiscal deficit that afflicts their economies, the response of European governments are austerity policies directed against the bulk of the population; wage and pension cuts, lengthening of the retirement age, reducing the duration of unemployment insurance and tighter conditions for access, cuts in social spending, education and health ... all of which means lower demand. To this must be added the Chinese authorities' efforts to transform the imminent explosion of the housing bubble in a controlled landing, which the supportive role played by China in the global economy will be reduced, this is a new chapter in the global crisis of capitalism.
Spain's official unemployment reached 20.5%, despite all official efforts to modify the methodology of measurement and 'make up' the results. The English bank, which has been hit hard in the field of savings banks, regional banks specializing in mortgage loans, following the bursting of the housing bubble, now heads to a second shock wave of the mortgage crisis. Spain and Portugal are the European Union countries with the largest number of people who are unemployed a year or more, as they exhausted unemployment benefits, increase delinquencies and defaults on mortgages and loans.
The crisis of confidence in European banks, has frozen interbank lending at times, an additional element that announces a recession on the verge.
"The situation is particularly difficult for French banks. Crédit Agricole has a Greek division is under pressure and has stakes in English and Portuguese banks. Societe Generale SA has a Greek bank that is in deficit. Another big French lender BNP Paribas SA, has a Portuguese bank billions of euros in debt Greek and English, which according to many experts in risk of default.
Crédit Agricole said Tuesday it may have to provision 450 million euros (U.S. $ 554.3 million) to cover bad loans in Greece and probably take a charge of 400 million euros (U.S. $ 492.7 million) in the second quarter to reflect the declining value of its subsidiary Emporiki Bank of Greece SA. The figures, in addition to approximately 2,600 million euros (U.S. $ 3,200 million) in earlier losses of Emporiki, threatening not to Crédit Agricole, but analysts said it would significantly reduce their profits in 2010.
ads toppled 4.7% Crédit Agricole shares, which have fallen 30% since mid-April, when exacerbated fears about the debt crisis in the region. They also contributed to a massive sale of European banking shares.
In Spain, the losses among banks worsened after the credit rating agency Standard & Poor's warned that the country most real estate companies could fail, thereby increasing credit losses in the sector. The shares of Banco Bilbao Vizcaya Argentaria SA fell 1.7% and the English Banco Popular fell 1.6%. "
macroeconomic figures States United reinforce the fears of analysts.
"The figures showed that the pessimists were right. The U.S. housing market recovery, the source of the latest global financial crisis seems to have been sustained in recent months by the fiscal stimulus.
debt crisis in Europe, poor macroeconomic performance in the U.S., risk of the imminent explosion of the massive speculative bubble in real estate and debt that are behind it, we are facing the prospect of a new global recession, and the best of an 'age of austerity' and low growth. The fragile recovery of the last six months have given way quickly, even before regaining the levels of the economy prior to 2008, a double-dip recession crisis, a nightmare for the capitalist governments expected a growth stage to enable them to cope on debt and fiscal deficit product of the 'rescue and stimulus packages "to those who avoided the collapse in 2008.
To avoid the possibility of a cessation of payments of countries like Greece, Spain, Portugal, Ireland, and the fall banks in France and Germany who are most exposed to these new 'toxic debt', and overall fiscal deficit that afflicts their economies, the response of European governments are austerity policies directed against the bulk of the population; wage and pension cuts, lengthening of the retirement age, reducing the duration of unemployment insurance and tighter conditions for access, cuts in social spending, education and health ... all of which means lower demand. To this must be added the Chinese authorities' efforts to transform the imminent explosion of the housing bubble in a controlled landing, which the supportive role played by China in the global economy will be reduced, this is a new chapter in the global crisis of capitalism.
Spain's official unemployment reached 20.5%, despite all official efforts to modify the methodology of measurement and 'make up' the results. The English bank, which has been hit hard in the field of savings banks, regional banks specializing in mortgage loans, following the bursting of the housing bubble, now heads to a second shock wave of the mortgage crisis. Spain and Portugal are the European Union countries with the largest number of people who are unemployed a year or more, as they exhausted unemployment benefits, increase delinquencies and defaults on mortgages and loans.
The crisis of confidence in European banks, has frozen interbank lending at times, an additional element that announces a recession on the verge.
"The situation is particularly difficult for French banks. Crédit Agricole has a Greek division is under pressure and has stakes in English and Portuguese banks. Societe Generale SA has a Greek bank that is in deficit. Another big French lender BNP Paribas SA, has a Portuguese bank billions of euros in debt Greek and English, which according to many experts in risk of default.
Crédit Agricole said Tuesday it may have to provision 450 million euros (U.S. $ 554.3 million) to cover bad loans in Greece and probably take a charge of 400 million euros (U.S. $ 492.7 million) in the second quarter to reflect the declining value of its subsidiary Emporiki Bank of Greece SA. The figures, in addition to approximately 2,600 million euros (U.S. $ 3,200 million) in earlier losses of Emporiki, threatening not to Crédit Agricole, but analysts said it would significantly reduce their profits in 2010.
ads toppled 4.7% Crédit Agricole shares, which have fallen 30% since mid-April, when exacerbated fears about the debt crisis in the region. They also contributed to a massive sale of European banking shares.
In Spain, the losses among banks worsened after the credit rating agency Standard & Poor's warned that the country most real estate companies could fail, thereby increasing credit losses in the sector. The shares of Banco Bilbao Vizcaya Argentaria SA fell 1.7% and the English Banco Popular fell 1.6%. "
macroeconomic figures States United reinforce the fears of analysts.
"The figures showed that the pessimists were right. The U.S. housing market recovery, the source of the latest global financial crisis seems to have been sustained in recent months by the fiscal stimulus.
Since completing the term of the tax credits and other incentives, the numbers have fallen dramatically (...), the Commerce Department reported that new home sales in that country fell 32.7% in May, the largest monthly decline recorded since 1963. That compares with 15% increase in April.
Analysts had expected a drop in May, as it was the most logical response to the end of the tax credit, but not a dramatic decline.
"This decline will not necessarily make a trend, because the immediate withdrawal of a stimulus is a re accommodation but then returned to normal," said Cesar Perez, head of research at Celfin Capital. (...)
Meanwhile, the Federal Reserve lowered its expectations for the U.S. recovery (without giving further figures), noting that there are still very weak sectors. "
China The housing bubble is a serious threat.
In an interesting article in the Chinese newspaper the leftist opposition, 'The Socialist' inter alia states that: "One of the features of the huge housing boom driven by China's assertion in the last 18 months has been the proliferation of financial institutions, local governments - UDICs (business investment for urban development). Now there are 8000 such companies, compared with almost none two years ago. Local governments are prohibited by law from entering into debt, so these vehicles are out of balance - similar to those produced by Western banks to remove loans risk their official accounts - have been created for access to bank credit and housing markets play. UDICs is believed to have caused the increase in bank debt from 8-11000000000000 yuan to finance infrastructure projects sponsored by local governments, many of which can become bitter, especially in the case of a fall in real estate sector.
According to Victor Shih of Northwestern University in the U.S., the combined debt of such entities associated with local governments can reach 24 trillion yuan at the end of this year, equivalent to two thirds of GDP. In Chongqing, the public debt of the largest city in China, Local rose 200% of their annual income - a level that is in parallel with the Greek government's problems! "
Chile: A very low future growth in favorable light. While continuing
triumphalist declarations of most economists and the Chilean authorities, who point out that Chile's growth will reach 6% or 7% in 2011, which is unbelievable when you consider that the average growth The last decade has been 4%. The landscape of international recession announced instead a very low growth, if not outright recession again, especially if you drop the price of copper and other minerals derivatives as the main item of exports from Chile.
"(...) there is an impending financial crisis in Europe. Interbank spreads have doubled the bank bond spreads, companies and governments have also risen sharply. This speaks to a big risk that there is a strong restriction of credit. To occur would be repeated at the box end of 2008, bringing the global economy into recession and would greatly affect Chile, as is well integrated with the world by exporting 40% of its GDP and foreign direct investment when between 30% and 40% of total investment. "
Central Bank meanwhile has sent a signal to the contrary, inflation expectations adjusted to 3%, and thus began the standardization of rates Monetary Rates, which were at 0.5% annually to 1%, but inflation X1 CPI is actually zero (leaves out the regulated services (8.5% of the basket), specific taxes (2.5%), little affected by monetary policy, and fuels (4.0%), and perishables (3.8%), highly volatile). According to economist Gonzalo Sanhueza, "The inflation we see is basically the stamp tax, specific tax increase on fuels and the greater rate Transantiago. Not from excess demand, inflation is building. Now, the level of economic activity is now lower than it had in 2008, so there is still an important capability gap. "And asked about the 14.5% increase in spending would, he continues," The investment is a component major reconstruction spending. If we talk about an investment of about U.S. $ 40,000 million and the government has said there is a destruction of capital of U.S. $ 20,000 million a year is to just rebuild, demand 50% of the investment. But that is only spending, not increasing the productive capacity of the country. Also, 90% of the investment in machinery and equipment are imported. The effect is transient and do not care. Now the consumer numbers are growing at 10% - 20%. If this is extrapolated, there is a tremendous increase in demand, as consumption is 70% of aggregate demand. But the wage, ie wage employment, growing at 5% bank consumer credit grows at 4%, consumer expectations are worsening, and the unemployment rate U. Chile is close to 10%. What then explains the increase in consumption is the government bond families, the cost to replace assets after the earthquake, the world ... But they are all transitory factors. "
In this bleak scenario, since the crisis, banks in Chile has achieved the best results, especially thanks to the profits on interest rates, which reduces potential growth. . High banking spreads reduce the country's competitiveness. According to the World Competitiveness Report 2010 prepared by the Institute for Management Development (IMD) in Switzerland, the drop in the ranking of Chile (site 28, the lowest in 10 years), partly due to high banking spread, which places the country in the post 47 of the listing. The report states that Chile is among the countries with the largest banking spread in the Competitiveness Ranking, with a decline in this indicator than ten years. This is explained by the high and increasing concentration of banks operating in Chile has set up a market of 'monopolistic competition. "
Notes:
1. La Nación, Argentina. The Greek crisis wreaks havoc on the balance sheets of European banks.
2. www.EMOL.com. 33% drop in U.S. housing sales reinforces fears of a slow recovery. Fernando Valdes Fernando Road.
3. The Socialist global capitalism enters the second stage of the crisis .. June 8, 2010. Www.correosemanal.blogspot.com/
4. La Tercera. "The Central sent a wrong signal to the market with rising rates." Sunday June 20, 2010
5. Idem
6.Reporte the Institute for Management Development
7. In April 2010, the first three private banks accounted for 52.4% (31.3% in 1990) and banks are 25 (38% less than in 1990).
In 1990, the three banks large concentrated 31.3% of the business. In 2000, the three largest banks concentrated 39.1% of the business, ie increased concentration in the top three 7.8%, but in April 2010 the three largest banks had come to control 52 , 4% of the business, or an increase of 13.3% of the concentration in the three largest concentration bancos.La is also clearly the evolution of the number of banks and financial institutions operating in Chile. In 1981 were 62 in 2010 are 25.
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