Page 4 of
5 CREDIT BUBBLE
BULLETIN The
meaning of stage II Commentary
and weekly watch by Doug Noland
suburbs as
the driver of global oil prices. China, India,
Russia and the Middle East for the first time will
consume more crude oil than the US, burning 20.67
million barrels a day this year, an increase of
4.4%, according to the International Energy
Agency… US demand will contract 2% to 20.38
million barrels daily… Economic growth of more
than 8% in China and India, coupled with
increasing car ownership among the countries'
combined populations of 2.45 billion people, will
more than compensate for falling US demand… 'Does
the US matter anymore?' said Mike Wittner, head of
oil research at Societe Generale SA… 'Has the US
mattered for the last few years? It is debatable.
As far as the oil market is concerned, demand
growth is going to be continued
to be driven by China and
the Middle East.'"
Japan
Watch April 25 - Bloomberg (Mayumi Otsuma):
"Japan's consumer prices rose at the fastest pace
in a decade in March as companies passed on higher
costs of gasoline and food to protect profits.
Core prices, which exclude fresh fruit, fish and
vegetables, climbed 1.2% from a year earlier…"
April 23 - Financial Times (David Pilling
and Kathrin Hille): "Japanese export growth slowed
to its lowest rate in three years… Export growth
for Taiwan and Thailand also slowed under the
influence of the weakening dollar and US economy.
The 2.3% year-on-year rise in Japanese exports in
March, coupled with an oil and commodity-led 11.1
per cent jump in the country's import bill, sent
its trade surplus down 30% to Y1,100bn ($10.6bn)…"
India Watch April 25 - Bloomberg
(Pratik Parija): "India, the world's
second-biggest wheat consumer, increased purchases
of the grain from farmers to bolster state
reserves that may be used to tame food prices. The
government bought 10.4 million metric tons so far
this season, 3.6 million tons more than the
quantity procured in the year-ago period… The
government will create a strategic reserve of 5
million tons of rice and wheat to bolster food
security…"
Asia Watch April 25 -
The Wall Street Journal (Nguyen Pham Muoi and
Stephen Wright): "Vietnam's inflation rate was the
highest in more than a decade in April, despite a
raft of government steps to damp rising prices,
which threaten to undermine the increase in living
standards brought about by the country's
free-market economic reforms. The consumer price
index is estimated to have risen 21.4% from a year
earlier in April…"
April 23 - Associated
Press: "Singapore's inflation hit a 26-year high
in March as food and oil costs continued to surge…
The consumer price index…rose 6.7% from a year
earlier after rising 6.5% in February…"
Latin America Watch April 22 -
Bloomberg (Thomas Black and Jens Erik Gould):
"Mexican President Felipe Calderon said his $50
billion public spending plan is already bolstering
economic activity in the country. Spending on
highways, ports and energy has helped Mexico's
first-quarter growth, including industrial
production, Calderon said."
Unbalanced
Global Economy Watch April 22 - Bloomberg
(Luzi Ann Javier): "Myrna Lacdao used to eat two
meals a day. Now she eats one and gives the rest
to her two grandchildren. Lacdao, 53, shares a
70-square-foot shack in Manila's San Roque
shantytown with her husband, two adult children
and grandchildren. After the price of rice rose
41% in the past year, only the youngsters get
three meals a day. 'I just take coffee in the
morning and then have lunch at noon,' said Lacdao,
who makes pillow cases for sale to neighbors,
contributing to the family's monthly income of
9,000 pesos ($215). 'That's my first and last meal
of the day.'"
April 25 - Bloomberg
(Christian Vits): "Money-supply growth in the euro
region slowed for a second month in March… M3
money supply…rose 10.3% from a year earlier after
gaining 11.3% in February… The ECB has cited
'vigorous' M3 growth, which reached a 28- year
high of 12.4% in November, as one of the upside
risks to the inflation outlook…"
April 24
- The Wall Street Journal (Laurence Norman): "The
outlook for the U.K. housing market darkened on
news that mortgage approvals last month fell by
nearly half from a year earlier to their lowest
level in 11 years. Mortgage approvals for house
purchases fell to 35,417 in March, down 18% from
February and 46% from a year earlier..."
April 23 - Bloomberg (Neil Unmack):
"London's office market faces 'imminent stress' as
the fallout from the global credit crisis weakens
demand for space in the city's financial district,
Moody's…said. Conditions in the City of London
deteriorated faster than any other European market
last year… Banks and securities firms may cut as
many as 40,000 jobs in London in the coming
months, according to forecasts… About 7.3 million
square feet of office space is due to be completed
in London this year with a further 8.3 million
square feet available by 2010…"
April 24 -
Bloomberg (Simone Meier and Sandrine Rastello):
"Business confidence in Germany and France, which
account for about half the euro-region economy,
slumped in April as record oil and food prices
stoked inflation… the lowest since January 2006."
April 21 - Bloomberg (Joshua Gallu): "Swiss
producer and import price inflation… unexpectedly
accelerated in March to the fastest pace in almost
19 years on higher energy costs. Prices for
factory and farm goods as well as imports rose
3.9% from a year earlier after gaining 3.6% in
February…"
April 24 - Bloomberg (Ben
Sills): "Producer prices in Spain accelerated in
March to the fastest pace in 12 years as more
expensive oil and other commodities increased cost
pressures for manufacturers. The price of goods
leaving Spain's factories, farms and mines rose
6.9%..."
April 25 - Bloomberg (Ben Sills):
"The unemployment rate in Spain, once an engine of
European job creation, jumped the most in 15 years
in the first quarter to a three-year high as the
building market contracted. The jobless rate rose
to 9.6% from 8.6% in the fourth quarter…"
April 25 - Bloomberg (Robin Wigglesworth
and Niklas Magnusson): "Swedish household credit
growth slowed to 10.9% in March as higher interest
rates limited demand for mortgages."
April
21 - Bloomberg (Alex Nicholson): "Russian retail
sales growth slowed last month. Sales rose an
annual 16.5% in March, compared with a revised
17.7% in February…"
April 23 - Bloomberg
(Jacob Greber): "Australia's inflation rate
accelerated to more than 4% for the first time in
seven years, driving the nation's currency to the
highest against the dollar since 1984… The
consumer price index rose 4.2% in the first
quarter from a year earlier…"
April 24 -
Bloomberg (Nasreen Seria): "South African
inflation accelerated to an annual 10.1% in March,
the highest in more than five years, adding to
pressure on the central bank to raise interest
rates. The CPIX inflation rate, which excludes
mortgage costs, rose from 9.4% in February…"
Bursting Bubble Economy
Watch April 23 - Financial Times (Joanna
Chung, Krishna Guha and Daniel Pimlott): "Risky
loans made to borrowers with poor credit at the
height of a housing boom may have helped to kick
off the credit crisis, but residential mortgages
were not the only type of lending where standards
fell. While residential property experienced the
most dramatic deterioration in the quality of
loans issued, contributing to a sharp rise in
defaults rates on mortgage repayments, attention
is increasingly turning to other kinds of loans as
the economic slowdown puts borrowers under greater
stress. 'We definitely saw a loosening of
underwriting in a broad category of instruments
over time which we are watching and monitoring,'
said John Dugan…Comptroller of the Currency…
'We're seeing declining credit in a broad range of
asset classes.' Defaults on other forms of
consumer loans such as home equity loans, credit
cards, auto loans and commercial real estate are
now beginning to shift higher… So far the 20
largest banks that the Office of the Comptroller
of the Currency regulates have raised in excess of
$80bn in capital since October to help deal with
mounting losses…"
April 23 - Financial
Times (Daniel Pimlott, Krishna Guha, Joanna Chung
and Ben White): "US bank failures could rise above
'historical norms' as a weakening economy puts
pressure on badly underwritten loans, particularly
in commercial real estate, according to a bank
regulator. In an interview with the Financial
Times, John Dugan, who oversees about 1,700
national banks as comptroller of the currency,
said the growing problems for lenders follow a
period of almost four years in which no
institution regulated by his agency had failed.
'We're going to have some more bank failures that
will come back more to historical norms and may go
above that with time. That is a natural
consequence of the economy going from historically
exceptionally benign credit conditions to
something that is more normal to something you
would get in a downturn.'"
April 24 - New
York Times (Barnaby J. Feder): "Call it the Lasik
indicator. As the economic downturn forces
consumers to cut back on discretionary spending,
laser vision-correction surgeries have been
falling — as they did during the last recession.
Although more than 800,000 Americans got Lasik
surgery in 2007, a slight increase from 2006, the
numbers started slumping along with the economy in
the second half of last year. And industry
analysts are now seeing a Lasik recession. 'We're
forecasting a 17% drop for 2008,' said David
Harmon, president of Market Scope, an eye surgery
market research house… Doctors and analysts said a
wide range of elective medical procedures,
including breast implants and skin treatments like
Botox injections, are also being affected."
April 24 - The Wall Street Journal
(Jeffrey McCracken and Janet Adamy): "When you
serve 1.1 million eggs a week, even a tiny price
increase can pinch. So when egg prices tripled for
casual-dining restaurant chains Bakers Square and
the Village Inn over the past two years, the
result was especially painful. Pricier eggs and
other foods added $9 million in annual costs. This
month, the
Head
Office: Unit B, 16/F, Li Dong Building, No. 9 Li Yuen Street East,
Central, Hong Kong Thailand Bureau:
11/13 Petchkasem Road, Hua Hin, Prachuab Kirikhan, Thailand 77110
