Bloomberg (February 23)
“Beijing’s interventions in the economy don’t always merit applause, but the government’s unprecedented seizure of Anbang Insurance Group Co. deserves a round. Anbang was a toxic threat to China’s financial system.” With total assets estimated to be “a staggering 3.4 percent of China’s GDP,” Anbang had the potential to deliver a shock “comparable to Lehman Brothers Holdings Inc. or American International Group Inc. in the U.S.” Chinese authorities have “nipped a potential disaster in the bud.”
Tags: AIG, Anbang, Assets, Beijing, China, Economy, Financial system, Interventions, Lehman Brothers, Threat, Toxic
Financial Times (March 16)
“Since nobody knows how many days or weeks Athens is from insolvency, the risk of a sudden exit is clear and present. Grexit may never happen — but it is time to get ready.” Without preparation, it is possible that “a sudden seizure of the Greek financial system” could “bring about a humanitarian crisis, global financial contagion and reputational damage to the EU.”
Tags: Contagion, EU, Financial system, Greece, Grexit, Humanitarian crisis, Insolvency, Reputational damage, Risk
The Economist (October 18)
At 250% of GDP, China has a debt problem. Still, this “is unlikely to cause a sudden crisis or blow up the world economy. That is because China, unlike most other countries, controls its banks and has the means to bail them out.” The lack of crisis may drive China down the same road Japan took in the post-bubble decades. “The biggest risk is complacency: that China’s officials do too little to clean up the financial system, weighing down its economy for years with zombie firms and unpayable loans.”
Tags: Banks, China, Complacency, Crisis, Debt problem, Economy, Financial system, GDP, Japan, Loans, Risk, Zombie
Institutional Investor (September 3)
“We have lived for some time in an integrated global economy mirrored by a globalized financial system. This means that the credit cycle and the business cycle have become almost one and the same.”
Real Estate Investment Today (April Issue)
“REITs contribute to more resilient real estate markets and a more resilient financial system.” Sub-prime mortgages contributed to the residential property collapse, but REITs helped stabilize the commercial market. A recent study by researchers from the University of Wisconsin and the Bank for International Settlements found that REITs provide markets with much needed transparency and liquidity. It’s “clear that REITs provide real benefits for the broader commercial real estate industry, for investors and for our nation’s economy.”
Tags: BIS, Commercial, Economy, Financial system, Industry, Investors, Liquidity, Markets, Real estate, REITs, Residential property, Resilience, Sub-prime, Transparency, University of Wisconsin
Wall Street Journal (January 9, 2014)
“Recent numbers and announcements out of Beijing suggest that one of the biggest global risks for 2014 is a Chinese economic slowdown. Five years after unveiling the most massive economic stimulus program the world has ever seen, the bills are coming due. And while a crash remains unlikely, deleveraging could uncover some nasty surprises in the financial system.”
Tags: Beijing, China, Crash, Deleveraging, Economic stimulus, Financial system, Risk, Slowdown
Time (December 30, 2013)
“Despite the hoopla over the approval of the Volcker rule, which restricts banks from making certain types of speculative investments, our financial system isn’t much safer than it was before 2008…. Banks used to be the servants of American business. Now they are its masters.”
Tags: Banks, Business, Financial system, Investment, Safety, Speculation, U.S., Volcker rule
USA Today (September 12)
“Five years ago this weekend, the world economy was in uncharted waters and sinking rapidly. The bankruptcy of Lehman Bros. on Sept. 15, 2008, touched off a horrifying financial crisis…. Far too much hasn’t been done, or hasn’t changed, since those scary days when it seemed the world financial system was unraveling.” Though the consensus in favor of urgent reform has long since faded, reform is nevertheless urgently needed. Today, “the shoring up of the financial system is no better than a work in progress, and another severe crisis in the not-too-distant future is hardly out of the question.”
Wall Street Journal (September 11)
Five years ago Lehman Brothers fell, setting off the Great Recession. Since the financial crisis, there has been no genuine attempt to remake the financial system and “far from being tamed, the financial beast has gotten its mojo back—and is winning. The people have forgotten—and are losing.”
Washington Post (May 13, 2013)
“It’s been five years since the onset of the financial crisis — the rescue of Bear Stearns in March 2008 — and we still don’t know whether the financial system is safe.” Progress has clearly been made, but whether it’s sufficient or even the right sort remains very much to be seen. “Will Dodd-Frank save capitalism or suffocate it? It may be years before we know.”
