Euro-zone banks could record as much as $398 billion in new writedowns by 2010 (more, but this is the ECB prediction)
As Europe enjoys a long-awaited summer heat wave, a sense of sunny optimism has taken hold of its financial capitals. Many in the regions beleaguered banking community reckon the worst of economic downturn is over. Equities markets have rallied since early 2009, property prices are leveling off, and signs of a recovery in consumer and industrial confidence are starting to surface.But before Europes financial-services industry pats itself too hard on the on the back, bankers and investors may want to heed the sobering analysis released recently by the European Central Bank ECB. Analysts at the ECB, which oversees the 16-country bloc that uses the euro, forecast that euro-zone banks could still record a further €283 billion $398 billion in writedowns by the end of next year, predominantly from defaulting corporate and consumer loans.If that eye-popping figure were to be reached, it would bring the total for European bank writedowns since 2007 to €649 billion $913 billion—about equal to the damage wreaked on the balance sheets of U.S. institutions, including such stalwarts as Morgan Stanley MS and Merrill Lynch BAC. The impact on workers also could be acute: In Britain alone, the Confederation of British Industry, a trade body, figures the countrys financial-services industry could shed an additional 28,000 jobs by the fourth quarter of this year.Most of the problems for Europes banks are linked to struggling economies. Although financial markets have largely recovered, the European Commission still expects the European Unions gross domestic product to contract by 4% this year and a subsequent 0.1% in 2010. The broader downturn has hit consumer spending and led to rising loan-default rates, particularly among small and midsize businesses. The expected jump in defaults also has raised concerns that major banks, such as Germanys Deutsche Bank DB and Spains BBVA BBV, may be undercapitalized and will need to raise more money from investors to cover their exposure.LOWER CONSUMER SPENDING WILL HURT”Banks still have a number of problems on the horizon,” says Pete Hahn, a fellow at City Universitys Cass Business School and a former managing director at Citigroup C. “Debt levels have come down, but [the banks] must come to terms with lower consumer spending and a sharp drop in business activity.”
via European Banks: More Pain on the Way? – BusinessWeek.
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Lifestyle Infrastructure
One of our special themes at the Advantages weblogs has been our assertion that US, India, China and most of the rest of the world that is growing
is likely to do so on the basis of a consumption revolution. Below is out insight piece that opened the chapter on India's final coming out that was much awaited but wasn't really happening till 2009..
The Commonwealth Games Infrastructure Train
A few years ago, when the Indian women shot Gold in Commonwealth Hockey and our aim in general started consistently being medal grade, we won the bid for New Delhi to host the games in 2010. This business of infrastructure had been mystifying sportspersons for decades in India; none too easily supported by the overarching smell of rent and inadequate facilities for local sports persons historically.
Even today most sports would bow out in front of Cricket and that is not a full-fledged event at the CWG, though there is still a toss-up for the T20 version to be added. Like most other spheres of life, China has been doing it higher, faster and stronger, having already held the challenging Olympics in 2008 earning over $2b for Beijing, the host city.
The story is quite public and you must have all followed it at least since August 2009 when the first few fistcuffs were exchanged regarding the lack of preparations for the CWG event now just 6-7 months away. The Sports Minister and the Games Organising Committee Chair Suresh Kalmadi has variously ben painted and vilified while we look at the rejuvenated parts of Wembley in London and survive on facepaint and cheering the local IPL franchise in Cricket games. The painting of events apart we just thought it important for Sports and Tourist infrastructure worth $1.5 billion to be included in the India story at about this time.
This preamble would survive your taste buds and your snipping scissors in the mind and we�ll come back right after lunch is over for you..
And the Original piece..follow up article on our Lifestyle Economics stream
If you have been following the India story closely, India�fs new developments are focussed on Infrastructure and Retail along with giant leaps in the Entertainment business. You can look closely at the India stories athttp://advantages.us/inframils to get a flavor of what�fs happening in Indian Infrastructure
On the other hand Retail Lifestyle businesses are increasingly attracting investors�cRural Markets may grow at a faster pace at least on the Drawing board. �c Where is Investor access? Why is it still on the government to make it happen? The FDI limits and the others are fairly rational policies..but where are the investors?..
Nanos will roll into homes by July end and IPL teams are already applying for trademarks as it looks set to become the greatest sporting extravaganza in the world, already ranked at #2 behind the NFL season in the USA. The 3G challenge will tear at Telecom companies�f profits in the coming years�c
(The image is of a young indian golfer in Scotland)
BUT, Importantly, India caught on to serious lifestyle investments early in 2005, Today with the debut of Cox and Kings IPO..
Where it is now?
Towns like Jalandhar, Ludhiana in Punjab, Jaipur and Agra on the Golden Triangle and such state capitals, heritage and business towns like Ahmedabad, Surat and Nagpur present a unique opportunity for Indian hospitality business to scale up, esp as Indian railways, india�fs aviation footprint and the road infrastructure will follow in step with the boom. Note: The Indian Maharaja with TC, Maharajas Express with Cox & Kings, and the other two luxury trains have started first season bookings quite well and money is being spendt to add gym and pool to the Palace on wheels as well ( More here ) Golden Palace started from Bangalore is not doing so well apparently. The Maharajas Express for example is 84 persons at an average of $1000 per night for a 7 day- 8 night tour between Mumbai and Delhi
