Monday, Jan 28, 2008
Scandinavian banks will suffer too
FT.com: Eastern Europe to feel credit squeeze
The turmoil in financial markets is turning into a nerve-racking test for the economies of central and eastern Europe and the former Soviet Union. Economists have said the fast-growing region faces a slowdown following the financial shockwaves reverberating around the globe.
Posted by lvmreader @ 07:00 PM (560 views) Add Comment
3 Comments
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1. Tom101 said...
Why will the Scan banks take a hit. I thought they were well regulated?
2. Niko said...
Scandinavian? Most of the banks in those countries are Germans and most of the real estate investors are from England and Ireland, also Israel has a big presence. I still don't get the scandinavian stuff ...
3. lvmreader said...
LVMReader Predictions
The oil selloff is likely due to forced liquidations / margin calls. Hedge Funds are selling oil to cover margin calls.
Oil will snap back to well over $100 (FY DEC2007) over the next 9-12 months.
A good position are Dec'08 European Calls (Exchange Traded) at $100, $105, $110, $115, $120, $125 strikes.
British retail sector in meltdown. Sales volumes only tell a tiny part of the picture. Massive discounts will keep irrelevant sales volume values high.
The largest retailers will be hit very hard. Chains such as DFS, CSL will be facing a serious cash crunch and possibly administration.
UK Builders will be driven lower throughout the year and possibly the rest of the decade.
Without signifcant foreign investment Sterling will weaken considerably, especially against the Euro for H1 2008, but expect Euro to start to fall dramatically by H2 2008 as the truth about Spain, France, Italy, Greece and Portugal comes out.
Monoline Insurance failure in the USA will lead to dramatic contagion effects to the UK economy, not least forced sales of more liquid assets leading to revaluations and demands for asset reallocation to preserve capital adequacy and liquidity ratios in UK Banks.
At most risk is Barclays. They will need to consider a merger with another large British Bank and a possible disposal of BarCap. (Barclays + NR?)
UK Mortgage Lending sector will be heavily constricted (A&L, B&B, C&G will all see their CDS spreads widen significantly).
As the pound weakens, increasing energy costs are exacerbated even further. Councils will take less revenue and thus there will be defaults on Muni Bonds.
Autoloans market is a point of conflagration.
Consumer Spending in the UK is ancient history. The 10yr party is long over.
Spain and Ireland are going to feel the worst hangovers.
As will be BMW Finance and BMW itself.
GMAC, Rescap, GM (and possibly Cerberus) to weaken in equity and widen credit spreads due to ridiculous credit exposure to Autoloans.
Ford / GE credit arms may be in some short-to-medium term trouble following Ambac and MBIA downgrades. Until a new insurer is found, we will see every large western auto maker's CDS spreads widening. (this is analagous to Cisco and Nortel lending dotcoms money to buy their products on zero-down, no pay for 12 months in 2000)
Singaporean banks in potential difficulty as well as Japanese banks.
General US and UK corporate debt spreads will widen (esp in Finance and Automotive sectors)
A better oil trade would be American Call Options on Brent Crude and WTI, but I am told these are OTC, not exchange traded. One can synthesise an alternative.