Diary of a Financier

A Quiet Christmas Week?

In Economics, Politics on Mon 20 Dec 2010 at 08:35
  • Investors stage protest in Bangladesh after stocks stage largest single-day drop in history.
  • North/South Korea still tense as the ROK completes military exercises.
  • Economists & regulators find seeds to a Brazilian credit crisis.

This was supposed to be a quite week leading up to Christmas!  With everyone out on vacation and everyone else daydreaming (“visions of sugarplums danced in their heads”), I rely on this week to:

  1. Finish year end logistics.
  2. Think about thinking about starting my Christmas shopping.

So as I lay in bed last night, I clicked through the futures and top news on my Blackberry.  I found this gem from BBC:

Hundreds of angry investors have staged protests in the Bangladeshi capital, Dhaka, after the stock exchange saw its steepest ever fall in a day…

The index ended the day down by 552 points or 6.72%.

It has been on a rollercoaster ride in recent weeks, hitting a record high on 5 December, having climbed 80% since the start of the year.

But on 8 December it nosedived, prompting protests in Dhaka and towns elsewhere.

Then, I sit down for my breakfast this morning, and:

North Korea has deployed multiple rocket launchers along the shore north of Yeonpyeong, Baeknyeong and Gangwha islands in response to a planned South Korean artillery drill on Yeonpyeong, government sources here say. The North earlier threatened an “unpredicted self-defense counterattack” to the drills.

Then I boot up my terminal at work, and:

Key emerging market Brazil may be in the beginnings of a credit crisis if an investigation into bailed out bank Banco Panimericano proves correct.

The investigation has uncovered problems in the country’s credit and asset backed security industry, according to Bloomberg.

What are the signs that there is a serious problem?

  • Costs for small banks are increasing
  • Certificate of deposit rates for small banks are increasing as they search for more capital
  • The commercial paper market is under pressure since the bailout
  • There has been a 23% rise in consumers paying loans late

But the major problem may be to come. Brazil’s surging inflation just went higher, and now economists see it at 5.4% for the next 12 months.

Shh! Don’t wake Baby Jesus.

–Romeo

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