Uncertainty over recession still persists
Wednesday, 12 August 2009
From Fazle Rashid
NEW YORK, August 11: When the subprime mortgage market blew up in 2007, no one gave it enough attention it truly deserved. The financial woes spread and gradually seeped into the rest of the economy. Two years on the world is still wresting with the deepest global recession despite some glimmer of recovery, the New York Times in an analysis said today
No one knows whether the current mix of monetary and fiscal policies will be enough to bring the recession to an end, same analyst said. The Treasury Department's $700 billion bailout programme has been able to stabilise the banking system but has done very little to do with the troubled loans on their books.
The Trouble Asset Relief Programme (TARP) was originally conceived as a programme for the government to buy troubled and unstable mortgage and mortgage-backed securities. The plan did not work well because government was investing more directly into the bank's and the banks were reluctant to part with their problem loans. Banks continue to hold toxic assets worth billions.
The optimists said 18 out of 19 biggest banks will be with enough capital to weather the storm of another economic downturn. The US bond investors are bracing for a record sale of $75 billion in debt sales. This will be the possible outcome of a joint meeting of Fed Reserve and US Treasury which ends tomorrow.
Upbeat economic data have in recent weeks boosted Asia-Pacific currencies against the dollar causing governments to worry that rising exchange rates could hurt exporters. Indonesia's stocks powered to a 14-month high reassuring domestic growth data that bolstered hope that the country is on its way to recovery from the recession. Germany is still at the risk of a credit crunch as banks face a wave of corporate downgrades, the banking sector analysts warned. German banks have about $1,135 billion in toxic and non-core assets on their balance sheets.
Accusation against Rio Tinto, a mining giant of Australia is spreading alarm that international trade could become unstable. Rio denied the accusation. Foreign investors are worried the case could have wide ranging implications.
The controversy over the accusation that the Bank of America hurried through the payments of hefty bonuses in the Merrill Lynch before it was taken over by BOA is still raging. Bank of America is facing accusations of underhand dealing by the Securities and Exchange Commission. A judge ordered both the SEC and BOA to submit a detailed reports before him by August 21.
Canada surprised the world and US aircraft manufacturer Boing itself by placing a order for supplying 15 Chinook heavylift helicopters at a cost of $1.2 billion dollar. In these days of stimulus packages and bankruptcies any new order for military hardware draws international curiosity.
NEW YORK, August 11: When the subprime mortgage market blew up in 2007, no one gave it enough attention it truly deserved. The financial woes spread and gradually seeped into the rest of the economy. Two years on the world is still wresting with the deepest global recession despite some glimmer of recovery, the New York Times in an analysis said today
No one knows whether the current mix of monetary and fiscal policies will be enough to bring the recession to an end, same analyst said. The Treasury Department's $700 billion bailout programme has been able to stabilise the banking system but has done very little to do with the troubled loans on their books.
The Trouble Asset Relief Programme (TARP) was originally conceived as a programme for the government to buy troubled and unstable mortgage and mortgage-backed securities. The plan did not work well because government was investing more directly into the bank's and the banks were reluctant to part with their problem loans. Banks continue to hold toxic assets worth billions.
The optimists said 18 out of 19 biggest banks will be with enough capital to weather the storm of another economic downturn. The US bond investors are bracing for a record sale of $75 billion in debt sales. This will be the possible outcome of a joint meeting of Fed Reserve and US Treasury which ends tomorrow.
Upbeat economic data have in recent weeks boosted Asia-Pacific currencies against the dollar causing governments to worry that rising exchange rates could hurt exporters. Indonesia's stocks powered to a 14-month high reassuring domestic growth data that bolstered hope that the country is on its way to recovery from the recession. Germany is still at the risk of a credit crunch as banks face a wave of corporate downgrades, the banking sector analysts warned. German banks have about $1,135 billion in toxic and non-core assets on their balance sheets.
Accusation against Rio Tinto, a mining giant of Australia is spreading alarm that international trade could become unstable. Rio denied the accusation. Foreign investors are worried the case could have wide ranging implications.
The controversy over the accusation that the Bank of America hurried through the payments of hefty bonuses in the Merrill Lynch before it was taken over by BOA is still raging. Bank of America is facing accusations of underhand dealing by the Securities and Exchange Commission. A judge ordered both the SEC and BOA to submit a detailed reports before him by August 21.
Canada surprised the world and US aircraft manufacturer Boing itself by placing a order for supplying 15 Chinook heavylift helicopters at a cost of $1.2 billion dollar. In these days of stimulus packages and bankruptcies any new order for military hardware draws international curiosity.