Multinational banks slash foreign lending to weather recession
Friday, 1 May 2009
From Fazle Rashid
NEW YORK, Apr 30: The multinational banks, mostly the European, have globally slashed portfolio of their foreign lendings by $1800 billion over the past few months. The change in policy reflects a reversal of years of financial globalisation. Needless to say curtailment in overseas lending will put the countries struggling to fend for themselves in dire straits in these days of severe credit crunch.
The American economy, the biggest and wealthiest, is contracting at its steepest pace in 50 years, the New York Times reported today quoting government sources. The last six months were brutal. Output fell by 6.1 percent annual rate. If the pace were to continue nearly $1.0 trillion would be wiped out this year.
The market watchers feel encouraged by the signs of recovery however trivial that maybe but the looming question remains. The question of the severity of job losses. More than five million jobs have disappeared since the beginning of recession.
Bad news continues to pour in from all corners. Chrysler, the giant US automaker, now in knee-deep trouble is expected to seek protection under chapter 11 euphemism for bankruptcy. American International Group (AIG) is preparing to change its name again. It was renamed as American International Underwriters. It will undergo another change signaling the severe wounds it is suffering. AIU does not represent enough of a change said its president for Southeast Asia.
Kenneth Lewis, once known as the rising star in the Wall Street, was stripped of his chairman's title of the beleagured Bank of America after investors held him accountable for all the misfortune that has befallen the bank. The bank was forced to accept two bailout financing from the government to remain afloat. Kenneth Lewis will however remain as the CEO of Bank of America. But many suspect that it would not be possible for him to work in a hostile atmosphere.
A number of European companies reported poor earnings as the global recession has taken a heavier toll on groups from real economy than on banks. French banking giant Societe Generale which was the first to report a case of fraud by its own staff is in the news again. The bank's chairman like his counterpart in Bank of America will step down as chairman as he succumbed under incessant verbal attacks.
Banking executives expressed fear that Congressional cap on compensation limit put on banks that received government bail out money has made it difficult for them to retain the services of the competent bankers as well as hiring new ones. Wall Street said paycuts have caused exodus of competent bankers to hedge fund and other industries.
Royal Dutch Shell will resort to cutting jobs as it continues to squeeze costs in response to lower oil price. The company axed 2000 jobs last year.
WHO has raised the alarm to level five, one point below the pandemic level on swine-flu. Phase six means a pandemic is underway. All countries should immediately activate their pandemic preparedness plans, WHO said It warned all countries should remain on high alert for unusual outbreak of influenza like illlness and severe pneumonia.
WHO minced no words in saying containment is no longer a feasible option and called upon nations to focus on mitigation. WHO has asked nations not to close their borders or restrict travelling.. WHO warned nations of dire consequences if they tend to ignore the advice.
There has been a significant development on the political front. Pakistan has succumbed to international pressure to lay open its nuclear programme to its western ally to allay fear about the security of the warheads in the face of a Taliban advance. Pakistan's allies have expressed concern over the safety of upto 100 atomic bombs in Islamabad's possession.
Taliban have reportedly positioned themselves close to Islamabad. The whereabouts of the 100 atom bombs will of course remain a closely guarded secret.
NEW YORK, Apr 30: The multinational banks, mostly the European, have globally slashed portfolio of their foreign lendings by $1800 billion over the past few months. The change in policy reflects a reversal of years of financial globalisation. Needless to say curtailment in overseas lending will put the countries struggling to fend for themselves in dire straits in these days of severe credit crunch.
The American economy, the biggest and wealthiest, is contracting at its steepest pace in 50 years, the New York Times reported today quoting government sources. The last six months were brutal. Output fell by 6.1 percent annual rate. If the pace were to continue nearly $1.0 trillion would be wiped out this year.
The market watchers feel encouraged by the signs of recovery however trivial that maybe but the looming question remains. The question of the severity of job losses. More than five million jobs have disappeared since the beginning of recession.
Bad news continues to pour in from all corners. Chrysler, the giant US automaker, now in knee-deep trouble is expected to seek protection under chapter 11 euphemism for bankruptcy. American International Group (AIG) is preparing to change its name again. It was renamed as American International Underwriters. It will undergo another change signaling the severe wounds it is suffering. AIU does not represent enough of a change said its president for Southeast Asia.
Kenneth Lewis, once known as the rising star in the Wall Street, was stripped of his chairman's title of the beleagured Bank of America after investors held him accountable for all the misfortune that has befallen the bank. The bank was forced to accept two bailout financing from the government to remain afloat. Kenneth Lewis will however remain as the CEO of Bank of America. But many suspect that it would not be possible for him to work in a hostile atmosphere.
A number of European companies reported poor earnings as the global recession has taken a heavier toll on groups from real economy than on banks. French banking giant Societe Generale which was the first to report a case of fraud by its own staff is in the news again. The bank's chairman like his counterpart in Bank of America will step down as chairman as he succumbed under incessant verbal attacks.
Banking executives expressed fear that Congressional cap on compensation limit put on banks that received government bail out money has made it difficult for them to retain the services of the competent bankers as well as hiring new ones. Wall Street said paycuts have caused exodus of competent bankers to hedge fund and other industries.
Royal Dutch Shell will resort to cutting jobs as it continues to squeeze costs in response to lower oil price. The company axed 2000 jobs last year.
WHO has raised the alarm to level five, one point below the pandemic level on swine-flu. Phase six means a pandemic is underway. All countries should immediately activate their pandemic preparedness plans, WHO said It warned all countries should remain on high alert for unusual outbreak of influenza like illlness and severe pneumonia.
WHO minced no words in saying containment is no longer a feasible option and called upon nations to focus on mitigation. WHO has asked nations not to close their borders or restrict travelling.. WHO warned nations of dire consequences if they tend to ignore the advice.
There has been a significant development on the political front. Pakistan has succumbed to international pressure to lay open its nuclear programme to its western ally to allay fear about the security of the warheads in the face of a Taliban advance. Pakistan's allies have expressed concern over the safety of upto 100 atomic bombs in Islamabad's possession.
Taliban have reportedly positioned themselves close to Islamabad. The whereabouts of the 100 atom bombs will of course remain a closely guarded secret.