Is the end of the financial crisis near?

After all the negative news about the financial crisis, time for a positive note. In June the remunerations rose 3%, this, in combination with a deflation, benefits our salary. Of course those who lost their job due to the crisis can’t feel this yet. However, if Keynes was right the production will be stimulated by raising expenses, the end of the crisis is near.

Géraldine De Dobbeleer

Banks: “Yes, we have!” Obama: “No you haven’t!”

President Obama emphasized the remarkable indifference and the passive behaviour of banks towards the (still present?) financial crises.
The banking industry on the other hand defended by saying ‘some fundamental changes have been made’. Banks plan to operate more balanced, using larger buffer zones and giving less leverage.
It will only be a matter of time to see if the banking sector makes true its promises and succeeds in creating a more confident appearance towards the public.

Source BBC News

Bart De Clercq

European banks pass Stress Tests

If the economic growth would decrease, real estate prices would decline and the unemployment would rise, European banks will lose €400 billions. But the Stress Test, made by the CEBS, showed that the European top 22 banks could survive because they are sufficiently capitalized to support an economic recovery. Growing prospective yields and capital injections from governments are very important elements. Despite the fact that the 22 banks aren’t named, this test will strengthen the credibility of the European Banks.

Fauve De Loof

http://www.tijd.be/nieuws/economie-financien/Banken_sterk_genoeg_volgens_stresstests.8239838-600.art

Credit ratings in the future

Due to the credit crunch we have lost faith in our investment system. Can the credit ratings give us our faith back in the future? It's possible, but investors want first of all relatively stable credit ratings so that they can avoid excessive volatility. From that fact ratings can also be a measure of credit stability. Second, investors would like to use the ratings as a consistent benchmark of credit risk, which involves that all types of ratings have to be performed in a broadly, comparable way. Further on, they want to be able to really analyse and evaluate ratings. At last investors think rating providers should compete fairly and freely, only based on their analytical value of their research and opinions.

Eleni Buysse
Source: http://www.ft.com/cms/s/0/38c412b8-ae9f-11de-96d7-00144feabdc0,dwp_uuid=39f40fe4-a6a2-11de-bd14-00144feabdc0.html?nclick_check=1

You scratch my back and I'll scratch yours

KBC’s business structure is threatened to change drastically, possibly losing some of its subsidiaries and even shutting down KBC Financial Products, one of its specialists in derivatives that is responsible for the CDO’s that caused a lot of troubles for the bank. Yesterday, the plan was presented to the European Commission, who demanded the reorganization in exchange for the government subsidy the member countries gave to save KBC. KBC Bank of Ireland and even the Belgian bank Centea are likely to be sold. The plan consist of several proposals, but there is not yet a definitive agreement.

Jens Demarée

Source: http://www.tijd.be/nieuws/ondernemingen_financien/KBC_staat_voor_drastische_hertekening.8239458-433.art

Don't blame it on bad mortgages

About a decade ago, deregulation and globalisation, induced a decrease in the bank's service sales income. Until then they could - without much risk taking - make a sound profit from trading stocks or underwriting and selling bonds for other people and institutions. In order to adapt, the banks started taking (huge) risks of their own and thought that they could spread the risk around. If it had not been bad mortgages, it would have been other adventurous risks that would have brought banks down.

Aurélie Demunter

Source: http://www.city-journal.org/2008/eon0102ng.html

Rumour hits Dexia

Due to the rumours about the nationalization of Dexia the share price hit a low. In the morning and early afternoon the Dexia share had made a gain of 5%, but in the afternoon somewhere about 15h00 the share price was dragged down by the rumours about the further nationalization of Dexia. The further nationalization of Dexia could be disadvantageous for the share holders. Later on these rumours were denied by the spokesman of Dexia but soon before the closure of the stock market the share lost another 15%.

Thomas Deman

source: http://www.tijd.be/nieuws/ondernemingen_financien/Geruchten_over_nationalisering_geven_Dexia_dreun.8090478-433.art