Monday, June 30, 2008

BIS Warns on Global Economy: A Deeper and More Protracted Downturn.

The BIS, also known as the Central Bank of Central Banks, is one of the most respected economic institutions. Prior to the start of the subprime crisis, I had posted an article where the BIS warned and in essence, predicted this current crisis. Now, the BIS is warning again. This time, with the threat of deflation!


"The eventual global slowdown could prove to be much greater and longer lasting than would be required to keep inflation under control. This could potentially even lead to deflation, which would evidently be less welcome."

"In the aftermath of a long credit-driven boom, it would not be surprising to see turmoil in financial markets, slowing real growth and temporarily rising inflation."

The Fed also believes that inflationary pressures will eventually come down as growth slows. The only difference being that a rebound in growth seems unlikely as this recession could last well over a year. Professor Shiller is not kidding when he says more stimulus will be needed. See: One Rebate Isn't Enough - New York Times

Inflation will probably still be the main theme this month, as the oil bubble (a.k.a. "oil crisis") continues to dominate. The price of a barrel of oil could easily spike to $200 if the conflict with Iran escalates within the next few weeks. If this be the case, then Professor Roubini deserves some serious credit for making the call. See: Rising Risk of a Military Confrontation between Israel and Iran? - Nouriel Roubini

It seems quite possible that a coordinated effort among central banks could be in the cards. See: BIS slams central banks, warns of worse crunch to come - UK Telegraph

About BIS
The Bank for International Settlements (or BIS) is an international organization of central banks which exists to foster cooperation among central banks and other agencies in pursuit of monetary and financial stability. It carries out its work through subcommittees, the secretariats it hosts, and through its annual General Meeting of all members. The BIS also provides banking services, but only to central banks, or to international organizations like itself. Based in Basel, Switzerland, the BIS was established by the Hague agreement of 1930

BIS 78th Annual Report (30 June 2008)


Anonymous said...

Definitely a reflection of the economy as a whole. Not only housing prices drop but the collapse of the credit markets. Eventually we will ride out this problem, but if you have cash now there are some bargains to be had. the bad credit loans blog

Adam said...

This is amazing, I tried to help them do BPO's and they were all booked up with other agents

Anonymous said...

Nice call, Oil bubble and deflation! You should be posting more articles sir.

Anonymous said...

To whom can help

I have been a target of countrywide, inabilities and practices of bad business practices,

We had a 30 year note with Chase and never late,

Now with Countrywide and was promised a refinance on a 15 years note to 30 year note with there new Modification loan program this started in Feb 2009, and we call every month several time to ask about it and was told everything was Ok and will hear something shortly.
That was in March, Lisa James

We heard something alright on April15 a notice to Foreclosure, and need to come up with 2 months payment and the Mays payment also

We call several times and talked to 6 people with no help just Phone tags

So we when to the Locale office and the Person we first talked to (Jason Guinther) was there we told him the story and the he call countrywide, after talking to there office for 30mins, he said they were never going to notified us that we don’t qualify for the program or even why,

The inability for them to notified us doesn’t constitute an hardship for us,

I thing they encourages there people in this tactics,

Can anyone help us and advise a place to call anything

I only have till May the 8 according to the letter

Thanks very much in this very important matter

Anonymous said...

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